RBC Capital Markets

Day ahead: The main focus today will be the BoE policy announcement and minutes (see GBP). There is another deluge of Fed‐speak (at least seven speakers; see table below for schedule), though some (Bullard, Kaplan) have spoken in recent days. The data calendar is quite light, German Ifo being the highlight. US GDP data are the final estimate of Q1 and should be of little consequence as the focus has shifted to the early indications on Q2. In EM, Banxico is universally expected to leave rates unchanged at 4.0%.

GBP: With FX markets actively hunting out the next normalisation candidate amongst central banks, there should be even more focus than usual on the BoE today. The meeting will be Chief‐Economist Andy Haldane’s last before he steps down from the Committee so while we expect a unanimous vote to maintain Bank Rate at 0.1%, we expect Haldane to again dissent on proceeding with the current GBP150bn QE programme as planned and expect an 8‐1 vote in favour of maintaining the current bond purchase target at GBP875bn.

If anything, the economic outlook has brightened further since the last meeting. Activity has rebounded relatively quickly in response to the reopening of the economy. The MPC should be able to remain relatively confident on the outlook, despite the delay to the final stage of reopening. We do not expect an announcement on the sequencing of stimulus withdrawal announced at the February meeting as soon as this month’s meeting. Into the meeting SONIA forwards price in around 15bp of hikes over the next 12 months, so the hurdle is high for the meeting to be taken as hawkish. We are long EUR/GBP in this week’s Trade of the Week.


t’s all about central banks, whether that’s the Fed or a more hawkish BoK. USD selling yesterday was capped by lackluster enthusiasm in some of the majors, but also some more hawkish hints from the FOMC. We expect more headlines in the afternoon session to remain key. USDJPY is back below 111 while DXY Index held onto 91.60 support. Therefore this morning may be muted, though we have Germany IFO at 09:00 BST. KRW took note of the BoK Governor signaling the first rate hike within this year, while we saw CZK and CLP benefitting from their own central banks on Wednesday. Looking ahead, we have the BSP at 09:00 BST where we expect some updated guidance and the Bank of England at 12:00.

GBP: Bank of England Bank Rate at 12:00 BST. The market forecasts a print of 0.1% vs 0.1% prior.. We expect the Bank to stay the course and wait until the end of the furlough scheme to chart its next steps. At that point, there will probably be more slack visible than the Bank currently projects, which will delay Bank Rate lift-off. However, in the meantime the Bank will want to dispel any accusation of complacency. We expect the MPC to signal vigilance and a readiness to act swiftly if necessary.