When is the BOE rate decision and how could it affect GBP/USD?

BOE monetary policy decision - Overview

Markets gear up for the Bank of England’s (BOE) decision on its monetary policy, which will be announced at 1100GMT, accompanied by the release of the minutes of its policy meeting. The September meeting does not have the post-policy press conference held by Governor Mark Carney.

The BOE is widely expected to leave the benchmark bank rate unchanged at 0.75%, with a 9-0 voting composition in favor of a status-quo. Today’s policy meeting is highly anticipated, as markets want to know whether Carney would drop its hawkish bias, as growing Brexit uncertainty is leading to policy paralysis while the economic situation deteriorates.  

Markets are pricing in that the BOE will tilt to a dovish tone, with both the Fed and ECB having resorted to rate cuts amid trade war and global economic slowdown. Carney and his company could very well hint that the next move in the rates could be downward instead of their hawkish tone.   

How could it affect GBP/USD?

Yohay Elam, Senior Analyst at FXStreet notes, “GBP/USD may trade choppily, and the reaction may come from the voting pattern. In the past few decisions, all nine members of the Monetary Policy Committee voted to leave rates unchanged. If any of those members dissents and votes for a cut – GBP/USD may temporarily drop. And in the unlikely case of a vote in favor of a hike – sterling may rise.”

“The pound may react adversely – and persist in falling – if the BOE removes its hawkish bias and shifts to a "wait-and-see" mode. That would mean that even if Brexit is postponed for an extended period or canceled altogether, the BOE will not hurry to raise rates – and that the economy has more deep-rooted issues. In the more extreme case of opening the door to cutting rates – GBP/USD may plunge”, Yohay adds.

Key Notes

GBP/USD path of least resistance is up on BOE day — Confluence Detector

BoE: No surprises expected – Rabobank

UK retail sales drop 0.3% m/m in August vs. 0.0% expected, GBP keeps highs

About the BOE interest rate decision

BOE Interest Rate Decision is announced by the Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.