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GBP: Confusion To Reign Next Week In The Middle Of The BoE - ING Meeting

Viraj Patel, an ING analyst, suggests that the chances of a raise in the interest rate by the Bank of England (NYSE:BOE) next week are scarce, however, he estimates that the confusion will reign in the markets of The pound, given the range of contradictory policy signals likely to emerge from the Super Thursday event (decision + minutes + inflation reporting).

Key statements:

"It could be a case in which the diverse political views of the individual members of the MPC and greater transparency of the BoE combine to offer little consensus on general policy thinking with abundant evidence of support Both for market doves and for hawks to adhere to their views. "

"Our base case is for a 6-2 vote split in the MPC in favor of holding rates, which in theory should be perceived as" dovish "given that the lack of active dissidents reduces the likelihood of an increase in November But this may not be enough to drive the pound sterling substantially down, especially since BoE observers have been accustomed to more spins and turns in recent months than a season of Game of Thrones.

"What will matter to the pound is what policy factors will prevail and if Governor Carney's head is dominated by concerns about slow activity and uncertainties about Brexit or whether it is in inflation above target and the cost of Low interest rates in the form of emerging credit bubbles that are keeping the BoE chief awake at night. Selling the GBP/USD en route to the BoE meeting, but 1.2850-1.2900 may be the lowest level we can get. "