BoE: Looking for a 6-2 vote in favour of unchanged rates - TDS

Analysts at TDS suggest that it’s going to be a busy day for the UK where we have the services PMI in the morning and the Bank of England decision and release of the IR at midday.

Key Quotes

“We’re just a touch below consensus in looking for the services PMI to remain unchanged at 53.4 in July (mkt 53.6) after mixed signals from the upside in manufacturing but downside in construction. The BoE decision will be the primary market mover of the day though. We think that June was probably peak hawkishness for the MPC after a series of upside inflation surprises largely reversed in July. With little chance of a rate hike this week, we think that the market reaction to the BoE decision will depend on the result of the vote and the changes to the macro forecasts.”

“We look for a 6-2 vote in favour of unchanged rates after 5-3 in June. Kristin Forbes has left the committee and no new hawks have taken her place quite yet. Haldane is a close call, but we think will stick with unchanged. Macro forecasts should be little changed, with 2017 growth revised a bit lower and softer inflation forecasts than the recent upside surprises would suggest. This should leave a dovish message overall, especially in comparison to other major central banks that are largely taking a more hawkish pivot.”