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The Bank of England (BoE) is expected to hold its first monetary policy meeting for 2017 on Thursday, February 2. The central bank is widely expected to maintain its interest rate at a historic low of 0.25 percent amid stronger than expected lift in inflation was more broad-based than widely anticipated and recovery in economic growth.
All but one of the 67 economists polled by Reuters expected that the BoE would keep its policy unchanged when it announces the outcome of the latest meeting of its rate-setters on next Thursday.
Britain's economy grew faster than expected in Q4 2016, according to a preliminary GDP release from the Office for National Statistics on Thursday. According to the ONS' data, GDP grew by 0.6 percent in the quarter, in line the consensus forecast of economists who saw growth increasing by 0.5 percent.
Further, on a year-to-year basis, growth was also above expectations, with growth 2.2 percent higher over the course of the last 12 months, compared to a forecast 2.1 percent. Also, the UK headline inflation data, released last week, has come in better than expected at 1.6 percent y/y(0.5 percent m/m), as compared to 1.4 percent y/y (0.2 percent m/m), the inflation target for the Bank of England remains at 2 percent.
The financial market is looking for the first BoE rate hike to occur in the second-half of 2018, which could at some stage start to be brought forward, should the tone of the minutes adopt a slightly hawkish hue against the backdrop of a rising inflation outlook. We wonder, however, whether BoE, under Governor Mark Carney, will actually ever see a rate hike whilst he's at the helm until 2019.
Meanwhile, the FTSE 100 rose 0.20 percent to 7,178.75 by 10:00 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained highly bullish at 175.76 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex
