TD see an interest rate cut coming from the BoE today, citing poor data into end-2019 leading to GDP and CPI downgrades.
If the Bank stays on hold though:
- we would look for a dovish message, with the door left wide open to a March rate cut
For the currency:
- GBP seems likely to remain more sensitive to virus-driven sentiment fluctuations and ongoing Brexit considerations than BoE policy for now. Our base case suggests some moderate downside. That said, the spot may rally sharply on a hawkish surprise if future rate cuts are priced out with confidence.
