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GBP may rise following BoE policy meeting, markets await Fed speeches

business-articlesGBP may rise following BoE policy meeting, markets await Fed speeches
  • BoE to hold policy meeting
  • ECB to publish economic report
  • USD may rise on Fed speeches
BoE to hold first policy meeting of 2018

The Bank of England (BoE) will make its first rate decision of the year later this afternoon, with movement in the pound likely to be driven by the tone of the bank’s accompanying statement.

With the bank widely forecast to leave its monetary policy unchanged this month, the BoE’s policy outlook for the coming year will likely be the focus.

Following its previous rate hike in November BoE Governor, Mark Carney stated that the next hike was likely to be some way off.

However, given the UK’s better-than-expected GDP reading last year and hints that the BoE may revise up its growth forecast for 2018, many analysts are speculating that the bank may seek to accelerate the pace of tightening.

At the same time with Brexit uncertainty unlikely to clear anytime soon, policymakers may instead decide that a ‘wait and see’ approach may be prudent; something that is likely to weaken GBP.

ECB to release latest economic bulletin

The European Central Bank (ECB) will publish its latest economic bulletin this morning, providing an overview of the Eurozone’s economy over the last couple of months.

The report is expected to detail the bloc’s strong performance towards the end of 2017 and will forecast this uptick in growth will continue into 2018.

Any hint that the bank expected inflation to heat up in the near future is likely to be supportive for EUR.

Nevertheless, the euro could find itself ceding some ground in the wake of the bulletin if it seems the ECB’s monetary policy plans for the coming year are dovish.

USD investors await Fed speeches

Following on from a number of speeches by Federal Reserve policy makers on Wednesday, there will be another round of speeches again later this afternoon.

There has been considerable speculation over the last week about the possibility of the Fed hiking rates up to four times this year.

Following the recent drop in share prices, some observers are questioning whether the US central bank may let go of the throttle a little.

However New York Fed President William Dudley, remarked yesterday that the recent stock decline had ‘virtually no consequence’ on his economic outlook, suggesting that he supported an accelerating pace of tightening.

Should those Fed policymakers set to speak today mirror his words, it would likely bolster bets for a March rate hike and lead to an uptick in USD.

Upcoming Data

Thursday, 8 February, 2018
09:00                     EUR ECB Economic Bulletin
09:50                     USD Fed Kaplan Speech
12:00                     GBP BoE Rate Decision
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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