Bank of England

The Bank of England has reduced the scale of its quantitative easing programme while issuing a sizeable upgrade to their 2021 economic growth forecasts, a decision that has prompted some volatility in the British Pound.

"We expect the overall messaging from the meeting will have a distinctly hawkish tilt," says Elsa Lignos, Global Head of FX Strategy at RBC Capital Markets. 

The British Pound will today take direction from the Bank of England who will announce - or delay - a decision on whether to boost or reduce quantitative easing.

There is a chance the Bank of England will announce a boost to its quantitative easing programme at its Thursday 06 policy event, according to economists at TD Securities.

The British Pound has more or less flatlined against the Euro will continuing to churn familiar territory against the U.S. Dollar, but early May could bring with it a welcome dose of volatility.

HSBC have become the latest UK lender to predict the Bank of England will begin the process of tightening UK monetary conditions at its May policy meeting, a move that could continue to underpin valuations in the British Pound.

The Bank of England is likely to follow the Bank of Canada and taper its quantitative easing programme next month, according to analysis from NatWest Markets.

The British Pound has lost further ground to register a new seven-week low against the Euro over the past 24 hours, as it continues to give back the gains made during the first three months of the year.

Although the Pound failed to rally in the wake of the March Bank of England decision, the narrative surrounding the central bank and the economy over coming months will likely be supportive of the currency.

City of London financial markets and Sterling exchange rates were little changed heading into the close on Thursday, indicating investors had priced-in the March monetary policy decision of the Bank of England (BoE) to perfection in a manner that might belie the nuances of economists' views on the subject. 

The Bank of England appears to have disappointed those wanting a stronger British Pound by signalling it would not raise interest rates until inflation in the UK has risen significantly.

The Pound-to-Euro exchange rate ended the week on its back foot amid further turbulence in the American bond market but kept a toehold on the doorstep of 1.17 and may overcome that on route to new highs this week, as the diverging policy stance of the Bank of England (BoE) vindicates Sterling's rally. 

The UK economy will be boosted by a sizeable pick up in consumer spending in 2021 as pent up savings are spent according to economists at Deutsche Bank, who say that the Bank of England might be underestimating the scale of the consumer-lead rebound.

The Bank of England's Chief Economist has said UK inflation is likely to rise notably over coming months, a comment that triggered a rally in the yield on UK government yields and recovery in the value of the Pound.

The Pound has confounded expectations with sharp gains over all major rivals until Thursday, leading to much head-scratching in some parts and prompting Pound Sterling Live to draw on the buy-side expertise of Toscafund Asset Management to tell the untold story of Sterling's steamrolling 2021 rally. 

The Canadian Dollar rallied to a three-year high with gusto on Wednesday, weighing on the Pound-to-Canadian Dollar rate in the process, although Sterling's recently-improved outlook has been buttressed by the prospect of a further dovish turn in monetary policy at the Bank of Canada (BoC). 

The decision is on balance a positive outcome for the British Pound which rallied against the Euro, Dollar and other major currencies following the outcome.

The Pound was taking a breather from its 2021 rally on Wednesday having eked out gains over only its European counterparts ahead of a Bank of England (BoE) policy decision that will be instructive of the outlook for Sterling and, potentially even other currencies too in the months ahead. 

The Bank of England will cut its basic interest rate and raise its quantitative easing programme to support the lockdown-ravaged UK economy, according analysts at major pan-European lender and investment bank.

Negative interest rates are unlikely at the Bank of England (BoE) if the latest remarks from Governor Andrew Bailey and Pound Sterling's response to them are anything to go by, although the matter is not decisively settled and at least some derivation of the controversial policy could yet be implemented.