2 Feb 2015
BoE rate hike now expected in H1 2016 – Rabobank
FXStreet (Edinburgh) - Senior Currency Strategist at Rabobank Jane Foley sees the BoE starting its hiking cycle at some point in the first half of 2016.
Key Quotes
“Through much of last year, the value of the pound was heavily influenced by speculation regarding the timing of the first BoE interest rate hike of the cycle”.
“The dovish November Inflation Report pushed back these expectations aggressively”.
The market is currently not fully priced for the first hike until late spring 2016. We do not expect the BoE to act until February 2016”.
“In the latter part of last year, the pushing back of BoE rate hike expectations afforded GBP protection against the weaker tone of the EUR and EUR/GBP traded in a choppy range”.
“However, the aggressively dovish ECB and the recent sharp falls in the value of the EUR have been the overwhelming feature of the new year”.
“EUR/GBP has broken down out of its recent range and we see risk of further falls”.
Key Quotes
“Through much of last year, the value of the pound was heavily influenced by speculation regarding the timing of the first BoE interest rate hike of the cycle”.
“The dovish November Inflation Report pushed back these expectations aggressively”.
The market is currently not fully priced for the first hike until late spring 2016. We do not expect the BoE to act until February 2016”.
“In the latter part of last year, the pushing back of BoE rate hike expectations afforded GBP protection against the weaker tone of the EUR and EUR/GBP traded in a choppy range”.
“However, the aggressively dovish ECB and the recent sharp falls in the value of the EUR have been the overwhelming feature of the new year”.
“EUR/GBP has broken down out of its recent range and we see risk of further falls”.