The last meeting led by Mark Carney

The Bank of England are meeting today at 1200GMT and the broad expectations are for no change in the interest rate decision with the vote expected to be 9-0-0 for remaining on hold. Growth and inflation have been revised down by the continued Brexit uncertainty and this does leave the potential open for some dovish dissent who favour early rate cuts. So, in the votes, if we do see a couple or more votes for rates, expect that to weigh on the GBP immediately out of the decision.

This is the view of TD Securities who say that:

"We expect the long period of increasingly entrenched uncertainty to make its mark on the macro forecasts, with downgrades to growth and inflation. We also look for the BoE to take another dovish step, replacing its hiking bias with more two-way risks. While we look for a 9-0 vote, there is also substantial risk of dovish dissents with up to 2 votes in favor of rate cuts. We see little risk of an outright hawkish outcome today, with our hawkish risk being one where the BoE makes as little change to the August/September stance as possible, trying to avoid making waves during the general election campaign."

Business investment concerns continue to weigh on the outlook

One of the concerns for the Bank of England has been the slow down in business investment due to Brexit uncertainty. You can see in the chart below how the trend is for falling investment levels:

The current expectations of rate cuts are only 2.4% chance of a rate cut seen for this meeting rising to 23% at the start of next year. See expectations below:

BoE interest rates

The GBP is going to be vulnerable to downside out of the meeting because:

1. The BoE are expected to cut their growth and inflation projections for 2020 and 2021

2. Many analysts see the BoE toning down the guidance that a smooth, orderly Brexit would lead to higher interest rates as the UK has still not left the EU.

Remember too that Michael Saunders (the hawk) said that continued Brexit uncertainty could warrant looser monetary policy. Remember that learning point from here too? Risk is to the downside for the GBP today out of the meeting.

Good bye to Mark Carney

This will also be the final meeting led by Mark Carney who I have admired in his role having a tough gig with leading the BoE while a protracted Brexit process has been underway. I wonder where Mark Carney will go next?

Mark Carney

Eamonn had a quick link to a BoE preview here he put up before he went on holiday. Now that's a lesson to us all on the power of early preparation from Eamonn ;-). Decision at 1200GMT. Here is a handy table below on likely outcomes courtesy of ING.