The pound could become volatile around midday today due to the Bank of England’s latest monetary policy meeting. Whilst decisive action or a significant shift in policy isn’t expected, the markets will be listening closely to comments from Governor Andrew Bailey and the tone in which they are delivered.
If officials take a cautious or ‘dovish’ tone, the pound could weaken. However, a more upbeat or ‘hawkish’ tone to the comments could give sterling a boost. Investors expect a rate rise to take place by May/August 2022, but any suggestion that this could change may influence the pound.
PMI figures for the UK came in better than expected yesterday, showing that the services and manufacturing industries grew in July. However, the figures signalled the slowest rate of expansion since the end of the lockdown, mostly due to staff shortages, supply chain issues and the end of the full stamp duty holiday for residential property sales.
