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BoE hike to be delayed further - Nomura

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 12, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) - Research Team at Nomura, suggests that in addition to negative risk sentiment, the BoE’s rate hike now looks likely to be delayed to November from May, which is also working negatively for GBP.

    Key Quotes

    “Our economist recently changed his forecast for the timing of the BoE hike from May to November as a result of the return of risk aversion and oil price weakness.

    The 2yr swap rate spread has been well correlated with EUR/GBP since 2007 and UK rate increase momentum has been slower recently than we expected, even after the Fed embarked on its lift-off in December. We still expect the 2yr rate spread between GBP and EUR to widen this year, as the ECB is likely to ease again in June, while the BoE is still on track to start monetary policy normalisation. Nonetheless, monetary policy divergence should be a less strong driver of GBP appreciation in H1 2016.”
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