The Bank of England (BOE) monetary policy committee will be announcing their interest rate decision today at 13:00 South African time.
Here is what we can expect...
Inflation Report: The Bank of England (BOE) Inflation Report sets out a detailed economic analysis and inflation projection upon which the monetary policy committee bases its interest rate decisions.
Inflation being just one of the main drivers of the U.K monetary policy, the BoE will keep a close eye on the UK Consumer Price Index (CPI). The Bank of England’s target of 2.00% inflation has not been met as we have seen an increase in the inflation number reported in July to 2.5% from the previous number of 2.4%.
Note: If we see the U.K inflation increase then we can expect the Pound (GBP) to weaken against all major currencies.
Interest rate: The consensus is that The Bank of England (BOE) will keep interest rates unchanged at 0.75%.
Note: If we see the U.K interest rate increase then we can expect the Pound (GBP) to strengthen against all major currencies.
How it affects us here in South Africa
Over the last couple of months, we have seen pressure on Emerging Markets as talks of international trade wars initiated by the U.S with both China and the EU dominate most of the year.
If the Bank of England (BOE) monetary policy committee does not increase interest rates today, we might see some Pound weakness come through and release some pressure on the Rand (ZAR).
What to trade today:
Major Forex pairs to look at will be GBP/USD, GBP/JPY, EUR/GBP
Major indices to look at will be the FTSE, DJ Euro Stoxx 50.
Exotic Forex pair will be USD/ZAR and GBP/ZAR. You can trade this via the NewwaveUSD ETN, (NEWUSD) and Newwave GBP Sterling ETN (NEWGBP)
Locally we have dual listed stocks that might be affected like Brait, Capital and Counties, Intu Properties and Mediclinic.
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