A dovish BOE monetary policy would help support U.K.’s economy but it would also weigh on the British pound. Consequently, U.S. investors who are interested in tapping into U.K. markets may consider currency-hedged ETF options to limit the currency risks.
Chris Hare, an economist at Investec in London and a former BOE official, argued that the markets may see BOE take a more solid stance as soon as the Financial Policy Committee’s next policy announcement on July 5 while monetary stimulus would be teed up at the next decision on July 14 in time for its following meeting on August 4.
The BOE has maintained a record low 0.5% rate since March 2009.
“We expect lower rates will be sanctioned at the early August meeting,” George Buckley, an economist at Deutsche Bank, told Bloomberg. “Carney also suggested against using negative rates, which supports our view of rates falling to 0.10 percent then QE. A preemptive loosening at the July meeting cannot be ruled out.”
For more information on the British markets, visit our United Kingdom category.
WisdomTree United Kingdom Hedged Equity Fund