UK: BoE Preview: Silence is golden – ING

By FXStreet Research Team at ING, suggests that as economic momentum stalls, the BoE’s challenge is to reflect near-term weakness in their forecasts without making a judgment on the referendum outcome.

Key Quotes

“Overall, a dovish MPC could see some pent-up GBP weakness emerge.

Loss of UK economic momentum has been sizable. All three PMI surveys released last week came in at their lowest levels since early 2013, implying that 2Q16 GDP growth might be the slowest since 2012. Uncertainty over the outcome of the EU referendum is surely playing a role, with firms reported to be delaying hiring/investment decisions until after the vote. Should the UK vote to remain in the EU, then we would expect activity to bounce back.

BoE faced with the tricky task of downgrading outlook whilst staying apolitical. Following the MPC’s warning last month that there might be “some softening” in 1H16 growth, we suspect the Bank’s 2Q GDP estimate will be revised lower in light of the soft data (INGF: 0.3% QoQ). Any dovish signals at today’s meeting are more likely to be expressed qualitatively.

Murmurings of a BoE rate cut today seem a bit wide of the mark. Speculation that some MPC members could vote for …read more

Source:: FX Street