BoE Cuts Growth Forecast

GBP

The Bank of England cut its growth forecasts on Thursday in the face of increased Brexit worries and a slowing global economy, but gave no indication it was considering lowering interest rates like other central banks. The BoE’s forecasts assume Britain avoids a Brexit shock, but still foresee growth of 1.3% for 2019 and 2020, down from 1.5% and 1.6% respectively in its last forecasts in May.

Bank of England Governor Mark Carney said “Profound uncertainties over the future of the global trading system and the form that Brexit will take are weighing on UK economic performance”. The BoE’s Monetary Policy Committee (MPC) voted 9-0 to keep rates unchanged at 0.75%, as expected by economists.

Prior to the BoE release, British manufacturers ‘output fell by the most in seven years last month as Brexit worries and weaker global demand choked off growth. The monthly purchasing managers’ index (PMI) added to signs that the economy is at risk of slipping into recession as businesses battle falling demand from Europe and China and the risk of a disruptive no-deal Brexit.

Key Announcements

12:30 - USD: US Non-Farm Payroll (July) Expected to be lower at 164K from 224K