BoE is expected to remain on hold
GBP/USD rises for a second day in a row ahead of the today’s BoE policy meeting at 11:00 GMT. According to economists surveyed by Bloomberg, the central bank will maintain the target for its asset-purchase program (QE) at 375 billion pounds. As of writing, sterling is trading around $1.5560, below the recent three-month high of $1.5605.
It’s hard to say now if the British economic rebound will persist, but the market sentiment towards the British currency has clearly improved since April 25 upbeat Q1 GDP release. Today’s figures added to optimism by showing British manufacturing production increased more than expected in March. However, most analysts still believe the BoE can add more stimulus in the coming months.
NAB: In May the majority of the committee would want to wait and see how the ¬extension to the Funding for Lending Scheme will work through the system. We could get a further extension of QE following the arrival of Mark Carney in July, but this is now becoming increasingly data dependent.
Given the recent policy easing in euro zone and Australia even the neutral tone of the BoE could cause a rally above the $1.5600 resistance. Watch the GBP crosses, such as EUR/GBP and GBP/AUD.