A quick summary on what to expect today in terms of the BOE event being called “Super Thursday”. The central bank recently changed the format of its releases to a new system where the quarterly inflation report, rate decision and voting records come out on the same day rather than being spread out over a period of two weeks in order to lower the amount of psychological speculation taking place between the different releases.
Today’s event is very different. 2 of the 9 members are
voting for a rate hike for the first time in over a year. Such changes fall in
line with a shift in the monetary policy that the Bank of England has been
working towards. With economic data improving, the country is close to
tightening its monetary policy and beginning its cycle of rate hikes and this
is evident with the first two dissenters on the MPC. At the same time, the inflation
report should shed further light on what to expect as well as an analysis of
the current situation. Carney is also set to speak just after the release and
could create even more volatility.
The likelihood is positive for Cable, potentially pushing the
pair higher even if the votes come out as expected. This could mark a new era
for the UK as the first country to emerge from the crisis, creating even more
divergence with other countries in terms of monetary policy.
ATM overnight volatility is spiking higher, suggesting a
150+ pips move is possible on GBP crosses with the potential for more. Equities
will also be in the spotlight with the FTSE likely to swing.
Tomorrow is another big day with NFP at 330 pm.