Indicator Report: Bank of England Official Bank Rate
September 9th, 2009 Posted in Market Movers
Name: Russell
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Tomorrow the GBP Official Bank Rate is set to be released at 11:00 GMT. Economists surveyed have almost all suggested that the Bank of England (BOE) will hold interest rates steady at 0.50% while electing to continue its quantitative easing program. Due to the recent positive economic data released over the past two weeks, we could expect some hint of a monetary policy change in the accompanying Monetary Policy Committee (MPC) Rate Statement.
Currently the BOE has placed in effect a series of monetary policy measures to produce a high level of liquidity in the British economy and financial system. In a surprise move in August, the MPC agreed to a quantitative easing program of £175 billion. Some economists speculate that the bank may lower the Interest Rate it pays to banks who keep overnight deposits. This new policy could be enacted to further stimulate British banks to put excess cash to use and back into the financial system.
The recent positive data we have seen coming from the U.K. lends strength to the notion of an economy slowly pulling itself out of a deep recession. Tuesday had the release of monthly manufacturing production data that was released to cheers as the data handedly beat expectations.
Finally, the GBP/USD has been a benefactor from the deprecation of the Dollar. The pair has put together a significant bullish streak the past week, climbing from 1.6161 and is now testing the 1.6600 resistance level. If a positive statement is released with the BOE’s Interest Rates, we may see the pair break the significant price level. If further monetary easing is enacted by the MPC, the pair could fall back to a range of 1.6450.
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Tags: BOE Official Bank Rate, British Pound, Forex Trading, GBP, The US Dollar
