British Pound Faces Bank of England Rate Decision

The currency pair with the most market moving data next week is the British pound. The Bank of England has an interest rate decision scheduled while the UK will release their industrial production and trade balance reports. Given the repeated disappointments in the PMI numbers, we now understand why the BoE has been reluctant to raise interest rates. Mervyn King and his colleagues are expected to leave rates interest rates unchanged once again at 5 percent - the last time they altered rates was in April when they eased by 25bp. If rates are not changed, the BoE will not release any comments or statements, which means that Thursday’s rate decision could be a non-event. In the week ahead, unless industrial production is surprisingly strong, the British pound should underperform the US dollar and Euro.