- Bank of England returns after summer holidays
- Positive economic data – did the BoE act too early?
- Economic outlook more positive – concerns of a recession diminish
- NIESR GDP estimates could boost Sterling
Bank of England statement to impact Sterling
The timing of the BoE’s decision to cut rates will likely be criticised following a big turnaround in the UK’s economic outlook. Mark Carney made the rate cut from 0.5% to 0.25% after a string of negative PMI releases just days before the bank closed for the summer holidays. However, economic data for the UK has shown a huge turnaround in recent weeks lending some to believe Carney acted too soon.
Carney may come under criticism for the haste decision but the economic outlook for the UK has improved significantly from the pre-Brexit gloomy forecasts. A number of banks and financial institutes have downplayed their forecasts for the UK, with odds of a recession diminishing for 2017.
Investors will be looking for reassurance from the Bank of England that the previous trajectory for the UK has been overturned, although it is likely Carney will remain cautious about the economy going forward, investors may find comfort in what is likely to be a more upbeat economic outlook from the Bank of England.
NIESR GDP estimates to benefit Sterling?
This afternoons NIESR report could provide support for Sterling, GBPEUR exchange rates have fallen over a cent since yesterday and the pair now trade below 1.19.
I am predicting good readings from today’s report. Strong retail sales, a weaker Pound and strong business conditions may only be for the short term, but these should reflect positively in today’s reading. I am therefore forecasting ranges of 1.192-195 by the end of the trading day.