BoE: Small step towards normalising - TDS

Analysts at TDS note that the BoE MPC voted 6-3 to keep policy on hold at today's meeting, with Chief Economist Andy Haldane joining the previous two dissenters.

Key Quotes

“The accompanying minutes revealed that incoming data was viewed to be in line with their May forecast, and our conviction of an August hike to Bank Rate is even further strengthened.”

“The MPC also signaled that they will start to run down their QE balance sheet once Bank Rate hits 1.5%, which we expect to happen in 2020H1.”

“FX: The one-two punch of the vote count and QE guidance has offered some intraday tailwinds to GBP. It screens cheap to cyclical drivers but data and Brexit votes offer some caution on the potential upside in immediate future. Technically, a close above 1.3220 increases the scope for a modest grind higher, though we prefer topside exposure to crosses like GBPCAD.”