14 Aug 2013
Flash: GBP, A big day for the UK – TD Securities
FXstreet.com (Barcelona) - Alvin Pontoh, FX & Rates Strategy at TD Securities notes the BoE and Claimant Count Change arriving at 830GMT.
Key Quotes:
“…with the first round of labour market data since the BoE set the unemployment rate as a threshold for monetary policy, as well as the minutes from the August BoE meeting”.
“For the u-rate, we see the risk of a higher (worse) reading, and expect to see the unemployment rate rise from 7.8% to 7.9-8.0% in June (mkt 7.8%). The implication would be that rather than the BoE looking for mid-2016 as when it thinks it would see the u-rate rate threshold hit, that date would move back to 2017, which is something that may finally see short sterling rally”.
“As for the minutes, our understanding is that the MPC held three votes – one on Bank Rate, one on QE, and an additional one on forward guidance”.
“Our view is that there may be a little more dissent than markets are prepared for, and we’re looking for a vote of 9-0 for Bank Rate unchanged, 8-1 for QE unchanged, with Miles continuing to dissent for another £25bn of QE, and 8-1 or possibly 7-2 for forward guidance. That said, the market reaction is more likely to be driven by the unemployment data, since BoE has been clear in making that a key indicator to watch”.
Key Quotes:
“…with the first round of labour market data since the BoE set the unemployment rate as a threshold for monetary policy, as well as the minutes from the August BoE meeting”.
“For the u-rate, we see the risk of a higher (worse) reading, and expect to see the unemployment rate rise from 7.8% to 7.9-8.0% in June (mkt 7.8%). The implication would be that rather than the BoE looking for mid-2016 as when it thinks it would see the u-rate rate threshold hit, that date would move back to 2017, which is something that may finally see short sterling rally”.
“As for the minutes, our understanding is that the MPC held three votes – one on Bank Rate, one on QE, and an additional one on forward guidance”.
“Our view is that there may be a little more dissent than markets are prepared for, and we’re looking for a vote of 9-0 for Bank Rate unchanged, 8-1 for QE unchanged, with Miles continuing to dissent for another £25bn of QE, and 8-1 or possibly 7-2 for forward guidance. That said, the market reaction is more likely to be driven by the unemployment data, since BoE has been clear in making that a key indicator to watch”.