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UK CommentMessage from Bank of England overshadowed by Brexit developments

  1. Bank of England's hands are tied
  2. Labour market still very strong
  3. Market probability of a rate hike is down
Bank of England's hands are tied
Needless to say, the Bank of England will repeat its message about the importance of the outcome of the Brexit process, probably with a few last words of warning about the consequences of a no-deal exit.
Labour market still very strong
Unemployment looks set for another 44-year low and wages are still growing well above 3 percent. Inflation came out in line with forecasts and is expected to stay around the Bank of England's target. All in all, macro numbers have been doing well since the last meeting.
Market probability of a rate hike is down
Today's decision will of course have little or no impact on rates or the pound. Following the dramatic development in the Brexit process, the market is now only pricing in a 20 percent chance of a rate hike this year.

Disclaimer

Lars Henriksson

Strategist

Foreign Exchange

lahe06@handelsbanken.se

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