The so called “Super Thursday” is in focus as a monetary policy announcement from the Bank of England is among the highlights of the European trading hours. The policy is expected to remain unchanged though investors await for the tone of minutes most notably the vote count on the rate-setting MPC committee.
Even though data showed that UK inflation slowed more than anticipated in February, wages have finally closed the gap with inflation. UK wage growth accelerates as employment rate hits record and the unemployment rate has not been lower since 1975.
Together with the EU-UK agreement on a transition period may allow the Bank of England to maintain its hawkish bias, and thereby support the pound. Market participants are likely to maintain their bets that a May hike may be on the cards.
As it stands, the markets favor a rate hike in May, pricing in its probability at 65.3%. Seeing a meaningful minority vote in favor of one this time around might help prepare the way for an upcoming hike, boosting its perceived likelihood and sending the British Pound upward.
BoE Could Boost the Sterling
Daily Analysis - 22/03/2018