Street Calls of the Week
Investing.com -- The Bank of England is expected to maintain interest rates at their current level on Thursday, following a hawkish cut in August, according to ING.
Markets are currently pricing in no chance of a rate cut at this meeting, though the November decision remains uncertain. Today’s focus will be on any new forward guidance from the central bank, the voting pattern among Monetary Policy Committee members, and the quantitative tightening (QT) announcement.
ING analysts do not anticipate any new forward guidance from the Bank of England. The central bank has consistently signaled a cautious and gradual easing approach, and recent economic data has not suggested any shift toward more directional guidance.
The vote split will likely serve as a key indicator of the MPC’s sentiment. ING predicts a 6-3 split, with Swati Dhingra, Alan Taylor, and Dave Ramsden voting for a cut. While this might be interpreted as slightly dovish, it would not cause a major market repricing, which remains heavily influenced by incoming economic data.
The QT announcement holds the greatest potential for market impact. ING expects the Bank to reduce its annual gilt reduction target to £75 billion, in line with recent consensus estimates. Market participants anticipate a shift toward younger maturities to alleviate pressure on the struggling long-end of the gilt curve.
Any negative surprises regarding QT could trigger gilt sell-offs that could significantly impact the pound sterling. ING maintains its baseline view for a gently supported EUR/GBP heading into November’s Bank of England meeting and budget events.