FXStreet (Guatemala) – Analysts at TD Securities noted the hawkish BoE today.
Key Quotes:
“The GBP remains in focus today after the Bank of England released the minutes from its July MPC meeting. While concerns over Greece and Chinese equity markets kept policymakers on a cautious footing at the time, the minutes were an incremental shift in the Committee’s thinking toward tighter policy settings in the months ahead. That said, the minutes also contained several important caveats and pointed to a number of uncertainties hanging over the outlook.”
“Overall, we noted a general consensus that the need for crisis level policy rates has past, but there is still broad disagreement on exactly what and at what pace tightening will be needed. Labour costs are rising, but so is productivity growth. Interestingly, there was also clear discussion that the stronger GBP will weigh on inflation, but there is broad disagreement on how much; if the recent decline in oil prices persisted, inflation would also fall short of its target.
The preliminary message we expect to see at the August Inflation Report will be that a limited and gradual tightening is increasingly likely to begin within six months. The prospect of tightening beyond the 50bps in total in hikes we expect in 2016 remains a high hurdle, however, and will need to be validated by incoming economic data.”
(Market News Provided by FXstreet)