Pound firms ahead of BoE decision

It’s is a Thursday and it’s a super one, thanks to Bank of England’s (BOE), mega releases and events. Today Bank of England (BOE) will announce its regular monetary policy along with minutes. What makes today special is quarterly inflation report, which will be followed by a press conference from Governor Carney.

All the three releases, individually have enough firepower to generate volatility spike and release of all three might cast a storm over pound based pairs. All will though depend on wordings. The market would be paying extra attention at today’s meeting as the central bank remains open to rate hikes due to higher inflation thanks to a weaker pound.

At the last meeting, three members of the rate-setting committee called for a hike of 25 basis points.

Preview of the four –

• Monetary policy decision – No major change is expected from interest rates point of view, however, the possibility of a hike cannot be completely ruled out.

• BOE minutes – This release will be the center focus for today. Focus will be on the number counts of dove and the hawks. At the last meeting, three members called for a hike. The market would focus to see whether the rift widens or narrows.

• Quarterly inflation report – Possibilities are high that tone might be dovish while forecasting inflation as energy prices continuing to remain under pressure and as the exchange rate has moved higher. Moreover shop prices declined again according to latest report from BRC.

• Mark Carney speech – Mr. Carney is most likely to exert his firm view over interest rate hike  to be the next policy move but he is also like to point out that now may not be the time to hike rates.

Upside surprise would have more momentum today as all communications are expected to be neutral.

The pound is currently trading at 1.324 against the dollar.