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UK in 2016: Bank rate rises & Brexit risk - RBS

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 28, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Ross Walker, Senior UK Economist at RBS, suggests that two issues will dominate the UK economic landscape in 2016: BoE Bank Rate hikes and ‘Brexit’ (British withdrawal from the European Union).

    Key Quotes

    “We believe the former are more likely than not, the latter (exit) less likely than not – but both are shaping up to be close calls, making 2016 a volatile year for UK financial markets. The RBS forecast is for the first 25bp Bank Rate hike in August 2016, with policy rates reaching 1.0% by the end of the year.”

    “We expect a referendum on EU membership, perhaps as soon as early June 2016 (failing that by October), with a narrowish vote to ‘remain’ in the EU. There is a high degree of uncertainty around these events but a combination of EU exit and no rate rises cannot be dismissed as a remote tail-risk outcome (a ‘leave’ vote would probably result in less monetary policy tightening).”
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