BOE – Key Event ahead - TDS

Analysts at TDS enlist key events due on the cards from the UK docket today, noting that the BOE remains the key risk event for sterling.

Key Quotes:

“GBP For data today we have the construction PMI for January, where markets are looking for a 0.4pt decline to 53.8, and we see marginal upside risks. The bigger event though will be the Bank of England decision and Inflation Report at midday.”

“Analysts unanimously looking for the BoE to keep Bank Rate on hold and to bring its QE programme to an end, so market reaction will likely depend on the changes to the BoE’s growth and inflation forecasts.”

“Strong momentum into the end of 2016 may see the BoE push 2017 GDP forecasts marginally higher. “

“But given the recent toastier European inflation trends, we think that the inflation projections will be the greater focus.”

“Near-term forecasts will be revised a bit higher, but not nearly as big of an upward revision as in November.”

“Governor Carney is also unlikely to sound overly concerned about the FX-driven and energy-driven spike in CPI during the press conference, and is more likely to maintain the view that substantial downside risks to growth lie ahead with Brexit coming into view.”

“So with markets seemingly braced for a more hawkish BoE outcome today, we think that the BoE’s lack of urgency on inflation and its continued concerns about the growth outlook will disappoint the hawks, and be seen as slightly dovish by markets.”