Interest rates will stay on hold and the BoE will announce a further GBP50 billion in Quantitative Easing, at least that’s what seems to be the general consensus in the market. The market will then hang on every word in the statement for clues as to whether more QE is in the pipeline.
If the BoE does GBP75 billion this time, then the GBP is likely to fall quite sharply and we could see some large-ish stops above .8350 in EUR/GBP get triggered. If the BoE does GBP50 billion as expected, but the language isn’t as dovish as anticipated, then cable is likely to rally sharply (depending of course on the levels in 48 hours time).
