The latest Bank of England rate/QE decision will be known today at 11.00 GMT

Tough call for Carney & Co today and a tough call for traders but let's have a quick look at some key questions/scenarios:

  • plenty of commentators/politicians/traders saying "Crisis what crisis?"
  • no actual Brexit yet so some dry powder needed for future downside and that's a long way off potentially
  • data this week has been softer than expected and a bit of a reality check
  • how much of a need is there for the BOE to be seen to be pro-active at this time?
  • just how effective would a further cut or increased QE be at this time?

Having considered those bullet points I'm going with an unchanged position this time but with plenty of cautious rhetoric leaving the door open for further easing down the road.

Voting should be 9-0 in favour of no change if the doves can be satisfied that the better data outweighs the weaker data but the soft inflation spectre still looms large. Benefits from a weaker pound in lifting CPI will take a while to work their way in and my guess is that the MPC will be waiting a little longer to see that impact if any.

Either way by the time the next meeting comes around in November we will get a better picture of the current post-Brexit vote honeymoon. But remember it's exactly that and the real test is yet to come.

No action today should provide a relief-rally but I remain a seller into those. GBPUSD has immediate offers/res around 1.3250 which capped the post-Retails rally. Larger interest behind that between 1.3280-13300 with more into 1.3350. Demand into 1.3200 then 1.3180 and 1.3150 again after holding around there yesterday.

GBPUSD and EURGBP order boards here and here.

Carney - Caution remains key