When is the Bank of England rate decision and how could it affect GBP/USD?

With the latest chatters over negative rates, coupled with a few months of no rate change, the Bank of England (BOE) is up for contributing to the “Super Thursday” at 07:00 AM GMT. The routine Interest Rate Decision will be accompanied by the release of the minutes of its policy meeting and the Quarterly Inflation Report (QIR). To increase the importance of Thursday, UK Chancellor Rishi Sunak is also up for another stimulus announcement, per UK Telegraph, to combat the economic woes due to the second national lockdown.

Looking backward, the British central bank held the key interest rate at 0.10% and Quantitative Easing (QE) program at £745 billion.

The latest inactions by the “Old lady” joins the fears of a double-dip recession for the British economy, due to the second broad-based coronavirus (COVID-19)-led activity restrictions, to hint at more downgrade in economic forecasts, like it did in the recent past. However, major market consensus doesn’t respect the Telegraph’s signal for negative rates while paying a little heed to talks of further QE.

TD Securities anticipate a surprise move while saying,

We have in fact left our base case unchanged, and expect an additional £120bn of QE to be announced, with no change to Bank Rate. The month-long lockdown makes a negative Q4 GDP print all but inevitable, leaving a pretty clear case for further stimulus.

Westpac also suggests an increase in the QE with comments like,

The Bank of England will take careful note of growing downside risks at its policy meeting as England begins its second nationwide lockdown. Consensus is for an extra GBP100bn in bond purchases.

How could it affect GBP/USD?

While more is always on the table for all the central banks amid the current coronavirus (COVID-19) resurgence, the BOE is more likely to keep the interest rates on hold. Though, the “Old Lady” is widely anticipated to offer QE and/or cutting the quarterly economic forecasts. This could weigh the GBP/USD pair towards the south if the US dollar manages to stay depressed amid a light flow of the election updates.

Considering this, FXStreet’s Yohay Elam said, The BOE's decision comes amid the UK's second covid wave and could push it into announcing new stimulus. Negative rates would weigh on sterling while more QE will probably boost it. The US election result could have a substantial impact on GBP/USD's moves, even around the BOE's "Super Thursday" decision.

The cable stays depressed while taking rounds to 1.2960, down 0.23% on a day ahead of the London open. Although anticipated bearish BOE suggests the GBP/USD pair’s further weakness towards a six-week-old support line, at 1.2870 now, 50-day SMA near 1.2980 and the 1.3000 round-figure can restrict short-term upside moves.

Key Notes

GBP/USD: Off lows, but weak tone persists on talk of BOE considering negative rates

Bank of England Preview: Lockdown raises chances of negative rates, streling could suffer

About the BOE interest rate decision

BOE Interest Rate Decision is announced by the Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.