Don’t expect much from Bailey – ING

Bank of England (BoE) Governor Andrew Bailey is speaking in Jackson Hole (1600) today, and we think he may emulate Powell’s approach of saying as little as possible. Bailey doesn’t have to deal with aggressive pricing (-39bp by the end of the year), but the UK still needs to gain a lot more confidence on the inflation front, notes Francesco Pesole, FX strategist at ING.

A bounce back to 0.8550-0.8600 remains very likely

“There weren’t many remarks from BoE policymakers in August: the most recent was from a hawk, Catherine Mann, who once again highlighted the risks of structural wage and price inflation. Before then, Chief Economist Huw Pill spoke on August 2 and said the BoE should not promise rate cuts in the very short term.

“There is a good chance that Bailey’s speech will be a non-event for sterling. EUR/GBP bounced back below 0.8500 amid growth differences between the Eurozone and the UK, but we remain cautious to watch the pair below given the spread rate picture. A bounce back to 0.8550-0.8600 remains our call for the coming weeks.”