- BOE: Market is expecting some restart of QE in the Gilt market, more likely in October rather than now. If this isn’t mentioned in the statement, we may see a short-covering rally in the GBP.
- ECB: Trichet will try to sound hawkish but he’s got nowhere to go. Some expectation of adjustments to long-term open market operations or perhaps a lowering in the rate in the deposit facility. If these happen then the EUR will fall back below 1.40 in my opinion.
All of this could mean that EUR/GBP sees plenty of volatility later tonight.
