The Growth Aces Research Teamcomments on BOE’s inflation report and Carney’s statement, and further shares the trade setup for GBP/USD.
Key Quotes
“The Bank of England revised up its growth forecasts and predicted wages would grow faster. Growth this year is forecast to be its strongest in several years at 2.9%.”
“For 2016, the BoE also expects growth of 2.9%, up from 2.6% expected in November. The BoE sees growth in wages by 3.5% this year after rising by just 1.8% in 2014.”
“The BoE expects that average consumer price inflation in the second quarter of this year is likely to fall to a record-low annual rate of zero, even lower than the 1% the BoE forecast in November.”
“After that the BoE forecasts it will climb steadily to its 2% target in two years' time, and a fraction over that in three years, if the BoE raises interest rates as markets expect.”
“Bank of England Governor Mark Carney said: “What is consistent with our objective of returning inflation within the next two years, it does require some limited and gradual increases in interest rates over the forecast horizon. It's pretty clear in terms of our central expectation that most likely next move in monetary policy is an increase in interest rates.””
“However, if global activity weakened and Britain became at risk of a vicious cycle of falling prices, the BoE said it was ready to cut rates, following in the footsteps of other central banks that have taken emergency policy action.”
“The GBP/USD jumped after the release of the BoE Inflation Report, in line with our expectations. Investors are starting to factor in a chance of the first hike in about 11 months' time, compared with 12 months before the report was released.”
“We stay GBP/USD long. Our target is near the resistance level of 1.5481 (23.6% of 1.7192-1.4952).”
Key Quotes
“The Bank of England revised up its growth forecasts and predicted wages would grow faster. Growth this year is forecast to be its strongest in several years at 2.9%.”
“For 2016, the BoE also expects growth of 2.9%, up from 2.6% expected in November. The BoE sees growth in wages by 3.5% this year after rising by just 1.8% in 2014.”
“The BoE expects that average consumer price inflation in the second quarter of this year is likely to fall to a record-low annual rate of zero, even lower than the 1% the BoE forecast in November.”
“After that the BoE forecasts it will climb steadily to its 2% target in two years' time, and a fraction over that in three years, if the BoE raises interest rates as markets expect.”
“Bank of England Governor Mark Carney said: “What is consistent with our objective of returning inflation within the next two years, it does require some limited and gradual increases in interest rates over the forecast horizon. It's pretty clear in terms of our central expectation that most likely next move in monetary policy is an increase in interest rates.””
“However, if global activity weakened and Britain became at risk of a vicious cycle of falling prices, the BoE said it was ready to cut rates, following in the footsteps of other central banks that have taken emergency policy action.”
“The GBP/USD jumped after the release of the BoE Inflation Report, in line with our expectations. Investors are starting to factor in a chance of the first hike in about 11 months' time, compared with 12 months before the report was released.”
“We stay GBP/USD long. Our target is near the resistance level of 1.5481 (23.6% of 1.7192-1.4952).”
