It's a Bank of England 'Super Thursday' tomorrow which means the monetary policy meeting is accompanied by its minutes and the quarterly inflation report (QIR). No major changes are expected so the Bank rate will remain unchanged at 0.75%.
The MPC will have an opportunity to reflect on the current policy outlook and many analysts are looking for Carney to reaffirm its interest rate guidance of slowly rising rates. Of interest will be if we see a change in the voting pattern of the Committee, with much recent speculation of a more hawkish shift.
However, the six-month Brexit delay has meant continued uncertainty for business investment, even if the cliff-edge has been avoided for now. Carney & Co are seemingly stuck in a holding pattern at present, given there is only one other 'super (QIR) meeting' until the new Brexit deadline.
Of course, if we do get clarity on the UK's exit in the second half of the year, then expect more concrete hawkish statements.
Here are the numbers to know ahead of the meeting:
Technically, cable has popped higher through key trend resistance at 1.3000 and is holding gains above the 100-day and 200-day moving averages. Gains suggest scope for the rebound to extend through to the 1.3075/1.3125 area in the near term, which gets us just below a long-term Fib level at 1.3144. Support is seen around 1.2965 where the 100-day and 200-day moving average signals converge.
We've also seen more upside for sterling versus the euro as the cross eased a bit further below 0.86 to test bids just ahead of a near-term 50% retracement (0.8583). The topside failure below previous resistance / support near 0.87 could set the stage for the next downside extension back towards the recent lows near 0.85, especially if we get a more hawkish shift from the MPC. Only a break above 0.8684 negates this downward momentum.
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