1 Jul 2013
Flash: BoE Governor Carney starts, August key for sterling - UBS
FXstreet.com (Barcelona) - The Bank of England meets this week with a fresh look, as new Governor Carney takes the reins of the British Central Bank.
According to Mansoor Mohi-uddin, Head of Foreign Exchange Strategy at UBS Macro Research, "The Monetary Policy Committee is likely to remain deadlocked with Miles and Fisher remaining in favour of renewed Gilt purchases, departing Governor King's arguments for more stimulus likely to be matched by Carney, but other MPC members still against additional easing."
Mohi-uddin thinks that the key risk BoE event for sterling i not this month, but the one after, with the publication of the next Inflation Report on August 7. "Here, the MPC, at the request of the UK Treasury, will release 'forward guidance' on the future conduct of monetary policy, conditional on how the economy evolves" Mohi-uddin notes.
At the moment, traders are not pricing in any significant announcements by the BoE, Mohi-uddin said. "But with the government announcing further fiscal cuts and Q1 UK current account showing the deficit rising to almost 4% of GDP, there remains the risk that the new Governor convinces the MPC to agree more substantial forward guidance that pushes sterling down" the UBS Strategist added.
According to Mansoor Mohi-uddin, Head of Foreign Exchange Strategy at UBS Macro Research, "The Monetary Policy Committee is likely to remain deadlocked with Miles and Fisher remaining in favour of renewed Gilt purchases, departing Governor King's arguments for more stimulus likely to be matched by Carney, but other MPC members still against additional easing."
Mohi-uddin thinks that the key risk BoE event for sterling i not this month, but the one after, with the publication of the next Inflation Report on August 7. "Here, the MPC, at the request of the UK Treasury, will release 'forward guidance' on the future conduct of monetary policy, conditional on how the economy evolves" Mohi-uddin notes.
At the moment, traders are not pricing in any significant announcements by the BoE, Mohi-uddin said. "But with the government announcing further fiscal cuts and Q1 UK current account showing the deficit rising to almost 4% of GDP, there remains the risk that the new Governor convinces the MPC to agree more substantial forward guidance that pushes sterling down" the UBS Strategist added.