June GDP Data Set to Reveal BoE Hawkishness
The British Pound has been bolstered by an increasingly hawkish tone from the Bank of England (BoE), but its resilience will be put to the test on Thursday with the release of June's monthly GDP data.
A 6-3 vote at the July BoE meeting, where Megan Greene, Catherine Mann, and Huw Pill backed a hike in interest rates to 4.00%, suggests that the Committee is gradually moving closer to another rate increase, even if a majority has not yet formed.
The recent rise in oil prices adds urgency to this debate, with the European Central Bank (ECB) having already tightened its policy in response to energy-driven inflation pressure, while the BoE has so far held back.
A strong June GDP print would give existing hawks more room to argue that inflation risk deserves priority, while a weaker result would strengthen Governor Andrew Bailey's and others' case for patience. This in turn could have significant implications for the Pound against other major currencies.