Thursday preview: BoE, ECB to stand pat; Vodafone, Shell updates in focus

(Sharecast News) - All eyes will be on policy announcements from the Bank of England and the European Central Bank on Thursday, with both expected to stand pat on rates. Laith Khalaf, head of investment analysis at AJ Bell, said it is "extremely unlikely" the BoE will do anything but hold interest rates at 3.75%.

"The Bank reduced rates in December and has clearly indicated it wants to adjust policy gradually, so consecutive cuts are pretty much unthinkable in the current economic environment," he noted.

"The last time we got consecutive movement on rates was in the summer of 2023, when the Bank was scurrying to hike interest rates in the face of rampant inflation. The last time we had a consecutive cut was in the first quarter of 2020 when the Covid pandemic looked like it was going to decimate the economy. Nothing that dramatic is happening right now which justifies quick fire rate cuts.

"The labour market is showing signs of cooling, and private sector wage growth has been reined in. Inflation picked up in December, but largely due to one-off factors which the Bank of England will look through. That said, the last time the committee met the decision to cut rates was a close one, with four out of the nine policy makers preferring to keep rates on hold. That speaks of lingering inflation fears within the committee.

"The market thinks we won't get an interest rate cut until April at the earliest, and when it comes, that may be it for this year. April will be a key month because the government's energy price subsidy will kick in, and inflation should fall back substantially. While the Bank of England is more focused on medium-term inflation expectations, it is inevitably easier to be a bit more dovish when inflation begins with a two rather than a three.

"It's not a good idea to peer too far into the future when it comes to interest rates, especially in such an erratic global economic environment. But as things stand 2026 looks like it could be a year of prosaic inaction for monetary policy, with a scant number of clips to populate a highlight reel."

A policy announcement from the ECB is also due, with rates expected to be kept at 2.00%.

Danske Bank said: "Lagarde is likely to face questions on the recent strengthening of the euro but provide a neutral answer, not highlighting any target level.

"We expect a muted market reaction as Lagarde refrains from giving new policy signals since the ECB awaits new staff projections in March."

On the corporate front, 'Magnificent Seven' member Amazon is due to report fourth-quarter results. In the UK, Q4 results from oil giant Shell and a Q3 update from Vodafone will be released, along with a Q1 trading update from caterer Compass Group.

Thursday February 05

INTERIM DIVIDEND PAYMENT DATE

JPMorgan European Discovery Trust, Vodafone Group

INTERIM EX-DIVIDEND DATE

Aberforth Geared Value & Income Trust

QUARTERLY EX-DIVIDEND DATE

Chenavari Toro Income Fund Limited NPV, Picton Property Income Ltd

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Continuing Claims (US) (13:30)

Factory Orders (GER) (07:00)

Initial Jobless Claims (US) (13:30)

Retail Sales (EU) (10:00)

Q4

Shell , Shell

GMS

Nippon Active Value Fund

FINALS

Shell , Shell

SPECIAL DIVIDEND PAYMENT DATE

Smiths News

SPECIAL EX-DIVIDEND DATE

Aberforth Smaller Companies Trust

EGMS

New Frontier Minerals Limited (DI)

AGMS

Compass Group, Compass Group, Hargreave Hale AIM VCT , The Sage Group

TRADING ANNOUNCEMENTS

BT Group, Compass Group, JTC, Vodafone Group

UK ECONOMIC ANNOUNCEMENTS

BoE Interest Rate Decision (12:00)

PMI Construction (09:30)

FINAL DIVIDEND PAYMENT DATE

Greencore Group (CDI), Smiths News

FINAL EX-DIVIDEND DATE

Aberforth Smaller Companies Trust, Avon Technologies , On The Beach Group , Victorian Plumbing Group