Bank of England’s Super Thursday
August 3 is not an ordinary day for the Bank of England (BoE). The central bank will make its monetary policy decision and release the minutes of these meeting and the quarterly Inflation Report. All these news will be out at 14:00 MT time. At 14:30 MT time, traders will watch the speech of the Bank of England’s Governor Mark Carney.
The BoE’s Monetary Policy Committee was more split over interest rates in June than at any time since 2011: five members voted to keep the benchmark rate unchanged at 0.25%, while three policymakers called for a rate hike. The market started pricing in a rate hike in August. Then, however, traders started doubting this prospect as the UK’s inflation rate unexpectedly declined to 2.6% in June.
With all this uncertainty about how the Bank of England will act, we expect great swings of the GBP in all of its pairs. A rate hike will send GBP/USD up at least for a short-term, while if the British central bank backs from raising rates, the pound will suffer.