Thursday preview: BoE expected to announce 25bp rate cut; WPP, IHG results due

(Sharecast News) - All eyes will be on the latest policy announcement from the Bank of England on Thursday, amid expectations of a 25 basis points rate cut. Kathleen Brooks, research director at XTB, said there is a 96% chance of a cut priced in by the interest rate futures market.

"After Thursday's cut, there is just under one further cut priced in by the end of the year. After Friday's rapid recalibration in US interest rate expectations, the BoE is expected to embark on fewer rate cuts than the Federal Reserve, which is helping the dollar to stage a comeback at the start of the new month," she said.

"The BoE is expected to cut rates to 4% from 4.25%, however, with inflation at 3.6%, we expect the BoE to be cautious about signalling further rate cuts, and there could be a 6-3 vote split at this meeting, suggesting that some BoE members do not believe that the Bank should be cutting rates at all."

She noted that UK gilts have outperformed their European peers in the run-up to this week's BoE meeting but have underperformed US Treasuries.

"This could be a sign that bond investors believe that the ECB is done with cutting rates, especially after higher-than-expected inflation for last month, while they expect the Fed and the BoE to play catch up and cut rates at a faster pace compared to the ECB, going forward," she said.

Danske Bank said it expects the vote to be split 6-3 with the majority voting for a 25bp cut and Greene, Mann, and Pill voting for an unchanged decision.

"Overall, we expect the BoE to stick to its previous guidance repeating that a 'gradual and careful approach to removing monetary policy restraint remains appropriate'," it said.

Danske noted that since the last meeting in June, data has been a mixed bag. It pointed out that growth has surprised to the downside, with the economy contracting by 0.3% month-on-month in April and 0.1% m/m in May, on course to undershoot BoE projections for the second quarter of 0.25%.

"The labour market has shown more pronounced signs of cooling with private sector regular wage growth at 4.9% 3M/YoY in May, lower than the BoE's projections of 5.2% but remains at elevated levels," it said.

"Similarly, payrolls have dropped the past months, and the unemployment rate has edged higher to 4.7%. On the other hand, inflation has been stronger than expected and inflation expectations have risen. Headline inflation rose to 3.6% y/y in June with food prices delivering the relative biggest overshoot compared to the MPC's forecast. On the back of this, we think the MPC is likely to lift the near-term projection for inflation slightly."

On the corporate front, advertising agency WPP and InterContinental Hotels are slated to report first-half numbers, along with Hikma Pharmaceuticals, Deliveroo and Serco, among others.

INTERIMS

Hikma Pharmaceuticals, Morgan Advanced Materials, Mears Group, Burford Capital NPV (DI), Serco Group, HUTCHMED (China) Limited, Harbour Energy, Spectris

Q2

Vaalco Energy, Inc (DI), Burford Capital NPV (DI), Flutter Entertainment (DI), Wheaton Precious Metals Corp.NPV (CDI)

AGMs

Ukrproduct Group Ltd, Caffyns, Marks Electrical Group, Investec, Northern 3 VCT, Volex

GMs

Celsius Resources Limited (DI), Geiger Counter Limited

FINAL EX-DIVIDEND DATE

BT Group, Monks Inv Trust, Northern Venture Trust, Northern 3 VCT, Speedy Hire, Northern 2 VCT

Ashtead Group, Cake Box Holdings, Halfords Group

FINAL DIVIDEND PAYMENT DATE

Montanaro European Smaller Companies Trust, Ninety One,

Caledonia Investments

INTERIM EX-DIVIDEND DATE

AstraZeneca, Aberforth Smaller Companies Trust, UIL Limited (DI), Jupiter Fund Management, Barclays, Dunedin Income Growth Inv Trust, Aon Technologies, GCP Infrastructure Investments Ltd, Taylor Maritime Limited NPV, Man Group, aronsmead Venture Trust, Informa, CVC Income & Growth Limited NPV GBP, Taylor Maritime Limited NPV, NATWEST GROUP, nchcape, Nichols, CVC Income & Growth Limited NPV Euro, Aberforth Geared Value & Income Trust, Reckitt Benckiser Group, Polar Capital Global Financials Trust, RELX, SEGRO, Baronsmead Second Venture Trust, Marwyn Value Investors Limited, Rolls-Royce Holdings, St Jame's Place, Foxtons Group Standard Chartered, Polar Capital Global Healthcare Trust, Residential Secure Income

INTERIM DIVIDEND PAYMENT DATE

Safestore Holdings,Polar Capital Holdings

SPECIAL EX-DIVIDEND DATE

Jarvis Securities, Aberforth Geared Value & Income Trust, Polar Capital Global Financials Trust

QUARTERLY EX-DIVIDEND DATE

Picton Property Income Ltd, Chenavari Toro Income Fund Limited NPV

UK ECONOMIC ANNOUNCEMENTS

Halifax House Price Index (07:00)

BoE Interest Rate Decision (12:00)

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Balance of Trade (GER) (07:00)

Industrial Production (GER) (07:00)

Continuing Claims (US) (13:30)

Initial Jobless Claims (US) (13:30)

Wholesales Inventories (US) (15:00)

Consumer Credit (US) (20:00)