BoE is not ‘Fed light’: Expect first hike in Q1 17 – Danske Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 5, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    Research Team at Danske Bank, notes that the Bank of England has made it clear that it is definitely not ‘Fed light’.

    Key Quotes

    “There are many reasons for the BoE to stay on hold for a long time: subdued wage inflation, ECB on an easing bias and Brexit uncertainties to mention a few.

    As a consequence, we have moved our call for the first BoE hike to Q1 17, probably in February (previously Q2 16, probably in May).

    We have lowered our UK interest rates forecasts across the curve but we still project higher UK interest rates over the medium-term horizon as the BoE is priced too dovishly.

    We see EUR/GBP trendless and volatile in the coming months but stress that risks are skewed to the upside around the time of the EU in/out referendum.”
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