BoE's Super Thursday is eyed. The Bank of England may affirm forward guidance and potential of further support, but downplay NIRP as vaccine rollouts lift prospects for the second half of 2021. Meanwhile, daily covid cases remain uncomfortably high but the lockdown is proving effective.
The GBP/USD pair has dipped under 1.36 and is set to stay in a tight 1.3500-1.3750 range, economists at Westpac report.
Key quotes
“BoE’s policy announcement, minutes and latest Monetary Policy (MPR) report on February 4 will be key in assessing how the UK is faring after the EU trade deal and through the current Covid lockdown. They should also provide a clearer impression of how BoE views the economy and whether NIRP remains possible given the tepid comments towards it from Chief Economist Haldane, Dep Gov Broadbent and even Gov. Bailey last month.
“The shocking spikes in covid cases into 2021 are now abating but remain uncomfortably high (latest daily case count being over 19k). Hospitalisation and mortality rates appear to have plateaued and the rollout of vaccines has already exceeded 10 M doses. Containing the pandemic will be critical in determining whether restrictions can be eased in March.”
“GBP/USD is likely to remain in a tight 1.3500-1.3750 range until it is clear that the pandemic is contained.”
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