(MENAFN– ecpulse) Investors awaited Wednesday`s important Bank of England Inflation Report and UK labor market data for signs of when interest rates might rise.
After months of holding monetary policy unchanged, the Bank of England (BoE) may get prepared for changing its monetary policy either through raising interest to absorb high inflation or add to stimulus to boost up recovery.
BoE is set to release its latest projections for UK growth and inflation later on Wednesday, with many economists expecting Governor Mark Carney to use the Quarterly Inflation report as a platform to modify his forward guidance policy after he chose not to release a statement during last Thursday’s rate announcement.
The report should provide a steer on the bank`s intentions for rate hikes, which it has said would be modest and gradual when they come. But data showing wage growth - a driver of inflation and a marker of how much slack remains in the labor market - could prove equally important.
Last week, policymakers kept interest rate unchanged in May at 0.50 percent and continued the pause of the assets purchase program APF at 375 billion pounds. However, markets participants are expecting policymakers to redefine BoE’s forward guidance policy to combat interest rate hike speculation.
Moreover, a report also released today may show UK ILO unemployment for the three months through June dipped to 6.4 percent. The ILO unemployment rate has been falling rapidly in the last few months.
Upbeat expectations and economic recovery signs continue to boost UK growth, easing pressure on the BoE to consider more stimulus plans in order to put the royal economy on a more sustainable footing.
Pound added gains against the U.S. dollar Wednesday, pushing the GBPUSD pair higher to $1.68225 from an opening of $1.68102. The GBPUSD pair so far hit an intraday high at $1.68226 and low at $1.68006.
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