TD Research discusses its expectations for tomorrow's BoE policy meeting.
"We look for unchanged Bank Rate but a further £120bn of QE. Risks of a rate cut to zero have risen since last week's BoE Preview, however, after the govt announced Lockdown 2.0. The BoE's Q4 GDP forecast was already looking questionable. It will now be unambiguously far worse than the BoE had expected," TD notes.
"The decision comes amid a very busy week as a potential Brexit deal and FOMC also loom. We think GBP may be dented somewhat in our dovish case, but think FX market attention will remain focused elsewhere. A dovish policy response favors our bias for flatter curves. We also like owning GBP frontend vs. EUR," TD adds.