While no changes in rates tonight, Bank of England (BoE) may hint a possible easing in 2020 due to tepid inflation. GBP/USD could fall lower.

  • BoE is expected to keep rates unchanged tonight. 
  • With Boris Johnson having the majority in Parliament, he will be able to get his Brexit deal through without much resistance by the end of January 2020.
  • However, UK business investment will remain pressured until an actual deal with the European Union (EU) is out.
  • Furthermore, PM Johnson’s willingness to leave the EU whether or not a deal is agreed upon means the uncertainty remains.
  • UK inflation has been subdued, having fallen to 1.5% in October and unchanged in November, which is short of their target of 2%.
  • Since the last meeting, UK’s economic data such as the manufacturing, services and construction sectors have all weakened. 
  • GBP/USD could head lower towards 1.2980 if BoE focuses on low inflation and easing in 2020. 

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Fullerton Markets Research Team

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