BoE: On hold scenarios for the September MPC meeting – ING

Analysts at ING list down the possible on hold scenarios from the upcoming BoE meet on Thursday and its possible impact on GBP.

Key Quotes

“Dovish hold (8-1 MPC vote split): Should one of the current dissenters (McCafferty or Saunders) revert back to a hold vote, then we would expect short-term UK rates to fall close to 10bp and GBP to move lower against both the EUR and USD. Risks are that EUR/GBP could further overshoot and test the 0.9180-0.9200 highs in this scenario.”

“Status quo hold (7-2 MPC vote split): This would be broadly in line with market expectations, making this week's BoE meeting a non-event. A slight hawkish tilt in the statement and accompanying MPC communications could inject a small upward bias in UK rates and GBP, though we would expect any market reaction to be fairly short-lived.”

“Hawkish hold (6-3 MPC vote split): Were we to see a third MPC member - most likely Chief Economist Andy Haldane - join the rate hike dissenters, we think market expectations for a November BoE rate hike could pick up to 50% (currently c.20%). A sharp move higher in UK rates could see GBP rally by around 1.0-1.5%; under this scenario, EUR/GBP could clear the 0.9000 handle and move down to as low as the 0.8920/50 region, while GBP/USD could test the 1.3350 level last seen almost a year ago (Sep-16).”