What can we expect today from BoE at 2:00 p.m.

Summer data appear to have given doves a boost ahead of Thursday's Bank of England (BOE) rate decision, with just 2.5 percent of analysts polled by Reuters expecting a rate rise.

The hawkish minority saw inflation - measured by the consumer price index (CPI) - consistently above the BOE's target of 2 percent while unemployment reached 40-year lows.

Inflation has been central to Threadneedle Street's recent focus. Contrary to most of the developed world it has been high, reaching 2.9 percent in June.

GDP (gross domestic product) growth has also failed to excite with a weak first-quarter rise of 0.2 percent (quarter-on-quarter) - falling well short of a BOE expected 0.5 percent, This was compounded by second-quarter growth of just 0.3 percent making the BOE's 2017 target of 1.9 percent growth look optimistic at best.

The broader economic effect has been swift: Retail sales have been flat in the first half of the year while manufacturing and services figures have slipped in the second quarter and corporate lending for capital expenditure has fallen to its lowest level since 2011.

Given the MPC's consistent view that balance sheet normalization will only begin once rates have risen significantly, analysts expect gilt (U.K. sovereign bond) stocks to remain unchanged and corporate bond purchases consistent at the £10 billion mark.

Source: Bloomberg Pro Terminal

Trader Bozhidar Arabadzhiev

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