As expected the Bank of England (BoE) delivered a substantial easing package today, including a 25bp Bank Rate cut to 0.25%, GBP70bn QE (GBP60bn government bond and GBP10bn corporate bond purchases) and a new Term Funding Scheme (TFS).
BoE maintained a very dovish stance indicating a further rate cut later this year to the effective lower bound at above but close to zero. BoE also stressed that it can do more QE (both gilts and corporate bonds) if needed.
We expect BoE to cut the Bank Rate by 15bp to 0.10% and to increase its buying of both gilts and corporate bonds at the November meeting.
We expect weak GDP growth, monetary policy and flows to weigh on the GBP in the coming quarters. We forecast EUR/GBP to rise to 0.90 in 6M. Longer term we expect EUR/GBP to stabilise to some extent given attractive valuations. We target 0.88 in 12M.
To read the entire report Please click on the pdf File Below
Which stock should you buy in your very next trade?
AI computing powers are changing the stock market. Investing.com's ProPicks AI includes 6 winning stock portfolios chosen by our advanced AI. In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. Which stock will be the next to soar?
Unlock ProPicks AI