Bank of England to lower growth and inflation

tony nguyen

As the next month is likely to be characterised by the will and movements of the world’s central banks, hints as to their future expectations on economic performance are key to formulating a likely policy outlook. Today’s Bank of England Inflation Report will give the Bank’s latest assessment of the UK economy and up-to-date forecasts of growth and inflation.

We expect the overall tone will be one of caution, with the MPC signalling looser monetary policy (further QE and possibly a cut in rates) later on down the line. They won’t be as blunt as that, but the indication will be given through an impression of continually falling inflation and the uncertainty over the European situation, while also revising their growth expectations lower through the rest of 2012 and 2013.

We think that this will be a net negative for sterling through the day. Mervyn King is a great one for talking down the pound and the market has pushed EZ areas out of the spotlight, for now, courtesy of Draghi’s speech last week. While this will not last, it is likely to mean that the market will be looking closely at GBP and weakness will be seized upon. A near-term target of 1.25 in GBPEUR looks sensible over the coming 48hrs or so.

On the European situation, all was quiet yesterday given most of the continent is on holiday. We continued to see peripheral bond yields retreat a little but on very little interest.

German factory orders were poor yesterday, falling by 0.8%, and further suggesting that once Europe comes back from its month-long vacation that the pressure on the core European nations will be similar to that being felt in the periphery. Of course, the ECB may light the blue touch paper in the opening week of September, but for now the market continues to drift.

We do also get German manufacturing production today at 11am and this has been a key indicator for future GBPEUR moves. We are looking for a decline of 1% to confirm further GBPEUR strength soon.

Indicative Rates Sell Buy
GBPEUR 1.2579 1.2608
GBPUSD 1.5567 1.5592
EURUSD 1.2378 1.2382
GBPJPY 122.05 122.31
GBPAUD 1.4761 1.4788
GBPNZD 1.9146 1.9174
GBPCAD 1.5534 1.5563
NZDUSD 0.8121 0.8141
GBPZAR 12.73 12.78
USDZAR 8.1696 8.2106
GBPPLN 5.1369 5.1636
EURJPY 96.87 97.13

Company Details

Bank of England to lower growth and inflation

Get a quick quote

Open Account with International Foreign Exchange

International Foreign Exchange are located at:
52 Brook Street, Mayfair, Greater London, W1K 5DS, United Kingdom

Get a Quick Quote

Newsletter Signup to CMT

Sign up to our foreign exchange newsletter to receive news updates directly by email

Compare Money Transfer will not spam you!

Click to Watch the Latest Videos on CMT

Compare Money Transfer Testimonial

Compare Currency Exchange News

All Rights Reserved: Copyright 2006 - 2017 Compare Money Transfer Limited