Bill Gross warns on gold momentum as regional bank stocks tumble
Investing.com -- The UK government needs to announce the budget date this week if it wants the Bank of England (BoE) to consider cutting rates in response to a fiscally tight budget, according to ING analysts.
The Office for Budget Responsibility requires 10 weeks’ notice for the budget, while the November BoE meeting is scheduled for November 6.
ING analysts point out that the UK government faces tight fiscal constraints, with one of the risks to sterling in coming months being a combination of tight fiscal policy and looser monetary policy.
Regarding monetary policy, several BoE members will testify to the Treasury Committee on Wednesday. They are expected to maintain their hawkish stance, which has led markets to price in only 10 basis points of BoE rate cuts this year.
This environment could push GBP/USD to test the 1.3600 level this week, though ING’s analysts believe a sustained break above this level may be difficult as they forecast a 25 basis point rate cut in November.
Market participants should also monitor potential tax increase proposals from the U.K. government, ING said in a note, adding that the most recent suggestion, which emerged on Friday, involved raising corporation tax for the U.K. banking sector.