HALISTER1: GBP May Rise if BOE Cuts Only 25Bps, Holds Back on QE: BK Asset

GBP May Rise if BOE Cuts Only 25Bps, Holds Back on QE: BK Asset

(Bloomberg) -- BOE doesn’t need to send a strong message to the market right now outside of a 25bps rate cut and a stern warning of more easing in the coming months, as economic and financial conditions are not desperate enough, BK Asset Management managing director Kathy Lien writes in note received today.
  • BOE can wait to ease again when there is greater evidence of a deep contraction in the economy
  • Since Britain voted to leave EU, the steps taken by BOE to stabilize the markets and encourage lending are working
  • Stocks are stable, yields have increased and “the doomsday sentiment in the market is fading,” says Lien
  • A lot of this has to do with govt’s decision to postpone invoking Article 50 for next year or two, reducing immediate risk for businesses
  • If BOE surprises with 50bps cut or restart their bond buying program, sterling will fall quickly and aggressively, says Lien
  • GBP/USD up 0.1% to 1.3336
  • BOE decision due at noon local time; preview here
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Kathy Lien (Bk Asset Management)

To de-activate this alert, click here

UUID: 7947283