Maybank FX Insight: GBP - BoE's Blockbuster Thursday - 5 Aug 2015

GBP: BOE’s Blockbuster Thursday

        Thursday’s (6 Aug) BoE MPC meeting will be closely watched as BoE will announce its policy decision, release its meeting minutes, and August Quarterly Inflation Report all in one go (at 7pm SGT), followed by a press conference (at 745pm SGT).

        While BoE is widely expected to keep monetary policy rate on hold and maintain its asset purchase, we caution for rising risk of a slightly hawkish BoE. In particular, BoE’s Weale and McCafferty could tilt the balance by possibly voting for a rate hike. BoE Governor’s press conference which is scheduled 45 minutes after the release could be used to tame excessive GBP strength as sustaining economic recovery and ensuring inflation goes back towards its 2% inflation remain its top 2 objectives.

        We remain bullish on GBP outlook underpinned by ongoing economic recovery, supported by domestic demand and a resilient labour market.  But in the near term, GBP bulls could be vulnerable to the downside given that many positives have been priced in. Disappointment in MPC votes or upcoming data could weigh on GBP strength. We remain better buyer on dips.