GBP: Wait for next week’s Inflation Report for key MPC news
This Thursday’s BoE meeting is likely to be a balanced affair as BNP Paribas economics is expecting little change to the policy stance. Critically, any formalizing of the dovish forward guidance will likely take place in the August Inflation Report, the following week on August 7th. Thus, there is scope for GBPUSD to extend its recent gains, a move that would push the pair further above its STEER-implied fair value, currently at 1.4930. Our medium-term bias remains for renewed GBP weakness due to the likelihood of further BoE easing later this year.
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BNP Paribas