TD on the post-BOE trade
TD FX Strategy Research discusses GBP outlook ahead of the BoE November policy meeting on Thursday.
«We expect the Bank of England to hike Bank Rate by 25bps tomorrow; this will be the MPC’s first rate hike in over 10 years. The vote is likely to be 7-2 in favour of a hike (with Ramsden dissenting, alongside one of Cunliffe or Tenreyro), though we see risks of an 8-1 or 6-3 outcome,» TD projects.
«Recent gains leave GBP vulnerable to a pullback unless the MPC sends further hawkish signals through the vote or guidance on future rate path.
Our base case suggests a «sell-the-fact» reaction is likely for sterling, but a surprisingly hawkish outcome would extend its rally until focus turns to the next round of Brexit negotiations (9 Nov),» TD argues.
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