GBP: BoE meeting should have a fairly limited impact – ING

According to analysts at ING, the forthcoming BoE meeting should have a fairly limited impact on the pound as the outcome of an early election should be the prime GBP driver in coming weeks and the BoE's interest rate path is conditional on the outcome of Brexit talks.

Key Quotes

“The BoE meeting and its interest rate path (and the continued signalling of a hike) should have a muted impact on GBP. The signal that monetary policy could eventually tighten is not overly relevant given the Brexit uncertainty.”

“The correlation of sterling to economic data surprises is currently non-existent. The sole driver of the GBP rally last month was the changing perceived odds of a 'no deal' Brexit rather than economic data points. This also suggests a limited impact of the BoE's guidance on GBP at this point.”

“Should the pre-election polls start to show an increasing likelihood of a hung Parliament (the latest ICM voting intention poll shows a narrowing gap between the Conservatives and Labour), EUR/GBP is likely to move closer towards the 0.8800 level.”