All eyes on the MPC meeting at 11.00 GMT
First things first. Just in case anyone is unaware, there will only be a total of 8 votes today and not the usual 9. This is after Charlotte Hogg decided to fall on her sword over breaching BOE discloser rules.
It shouldn't matter much but you just don't know what the algo boxes will make of it if they think there's a vote missing.
Back to business. I'm finding it hard to disagree with Mike's preview earlier so I'll try not to repeat what he's said.
My own view is that the BOE will be in no rush to mess with rates, or even the vote, with a general election around the corner. Forget inflation, forget GDP, forget that they may say an election doesn't factor into their decision, it does and it will. There's nothing in the data thus far that means the BOE need to tip the apple cart before an election.
However, that doesn't mean there's zero risk today. The surprise was Forbes last time and that she beat arch-hawk McCafferty to the hike button, was a shock to say the least. Today and going forward, he'll likely be the next worm to turn if inflation holds up and the economy doesn't crater. There is a risk he votes for a hike today but I think it's very small.
The one thing with the BOE system of votes is that it's pretty straight forward and one of the clearest and cleanest forms of forward guidance. There's no language, there's no bluster, it's a straight win or lose vote, and you can see how close or far away a policy move is. Even if someone else votes for a hike, at 6-2, it doesn't mean one is around the corner (though that won't stop the pound jumping).
So, I'm expecting a 7-1 (hold/hike) vote pattern. If it goes 6-2 and it's McCafferty, the pound will jump but probably not too much as he's the hawk. If we get anyone else but him voting, then we'll have some action. Get 3 votes for a hike and the market will be caught short (literally), and we'll be saying hello to 1.30 and maybe more pretty swiftly.
As Mike says, the most likely hawkish input will be from the forecasts. IF (big if) the BOE want to send a message that they are currently happy with the economy then the forecasts will be where that's reflected. I suspect we'll get the same old excuse that inflation is rising but temporary. If the pound is going to move (and we get nothing from the announcement itself) it will be in the presser and on the forecasts but don't expect a huge move in the pound on that.
1.2900 is where the main support sits and barring any real negative or dovish headlines, that could be a solid bottom. It depends on where we are in 30 minutes or so. Under 1.2900, there's short-term trend line support at around 1.2870/75 and something more solid in the 1.2850/60 area.
GBPUSD H1 chart
As always we'll be front and centre for it all. We'll get the announcement and the statement/minutes/forecasts, then we'll head off to the Old Lady for the presser.
All of it can be watched here.
