No fireworks from BoE today

The pound has taken a major hit last month when it declined to as low as 1.184 against the dollar. The decline in the pound came despite the fact that the UK economy has done remarkably well in the aftermath of the referendum in June, especially when compared to the gloomy forecasts.

The Bank of England (BoE) has already fired a bazooka earlier this year by increasing the asset purchase target by £60 billion, including £10 billion asset purchase and most importantly balance sheet funded £100 billion targeted lending scheme. So it is likely for the central bank to wait out to measure the effectiveness of its firing at least for one or two quarters. In addition to that, like we said that the economic outcome hasn’t been dire to act back to back.

Bank of England (BoE) is scheduled to announce monetary policy at 12:00 GMT.

Policy-wise, not much is expected from BoE other than to maintain it steady. However, it may stress that the Bank of England (BoE) is ready to act and support the economy as needed. The budget statement is due this month and we don’t expect the central bank to act before that.

The most important thing to watch out for is the inflation part, which has jumped recently due to the massive drop in the pound. So watch out for the outlook: How the central bank is planning to manage inflation, support growth and maintain monetary easing; all at the same time.

The pound is currently trading at 1.242 against the dollar.