The British pound has done little but consolidate above nearly 2-year lows, but if the release of the Bank of England’s meeting minutes from August are anywhere near as market-moving as the BOE Quarterly Inflation Report, GBP/USD may not hold near current levels for long.
During the July meeting, the minutes revealed that there was a 7-1-1 vote to leave rates at 5.00 percent, with one dissent in favor of a 25bp hike and one in favor of a 25bp cut. With indicators of growth continuing to deteriorate and inflation figures reflecting rising prices, there is potential for there to be yet another split vote this time around, and such a result is unlikely to have a big impact on GBP/USD. However, given the revised GDP and CPI projections in the Quarterly Inflation Report, I think there’s some potential for additional Monetary Policy Committee members to have voted for a rate cut. Indeed[B], a 6-2-1 or 7-2 vote count could weigh heavily on the British pound on Wednesday morning[/B], but if there is sufficiently hawkish rhetoric contained within the minutes, the UK currency should hold above the recent lows.