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BOE – What to Expect Today

BOE – What to Expect Today

The Bank of England monetary policy announcement today is the second most important event of the week after Friday’s NFP report. 

The BoE has a lot to be optimistic about. They are leading the developed world in vaccinations with more than half of their population receiving at least one dose of the COVID-19 shot. New daily virus cases have fallen below 2,000 which is a dramatic improvement from the more than 68,000 cases reported on January 8th. Along with low double digit to single digit deaths, the U.K. economy is ready to reopen fully by ending all lockdown restrictions on June 21st. Restaurants, pubs and gyms have been open for a few weeks and the economy is already beginning to reap the benefits with the PMI index rising to its highest level in 89 months. When the country fully reopens, we will see an even bigger boost to growth.  

BOE – What to Expect

The Bank of England on Thursday, 6^th May 2021 may add fuel to investors’ expectations that its next move will be to tighten monetary policy rather than provide fresh stimulus to the economy as the pandemic eases. 

The U.K. central bank is set to significantly upgrade its growth outlook as the debate shifts away from whether it should cut interest rates below zero to how fast can the economy recoup its pandemic-induced losses. A forecast for inflation around its 2% target within the next two years could be read as an endorsement to growing expectations that interest rates are headed higher, according to Bloomberg Economics. 

Unless the BoE statement is riddled with concerns, keep an eye on the GBP/USD which should trade higher following the monetary policy announcement. 

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