BoE meeting unlikely to provide a strong direction for GBP – TDS

Next week, the Bank of England (BoE) will have its monetary policy meeting. No change is expected. According to analysts from TD Securities, the outcome should not offer a strong directional cue for the pound. They expect the currency to remain in familiar ranges. 

Key Quotes: 

“We look for the MPC to keep policy unchanged at this meeting, despite recent hawkish sentiment from two members. While wage and inflation dynamics remain strong, there are early signs of a slowdown in demand. The QE decision will likely not be unanimous.”

“We do not expect the August MPC meeting to provide a strong directional cue for GBP, particularly as FX markets have been content to shrug off stronger policy signals elsewhere. GBP’s sensitivity to risk appetite is high and spot is close to near-term FV (fair value) on our dashboard. This should see GBP anchored to familiar ranges as summer trading conditions prevail.”

“Duration remains vulnerable to the pace of BoE buybacks in the coming months. We prefer going into the meeting with a steepening bias for the front-end and curve.