- Analysts from Morgan Stanley
This week analysts will eye U.K. manufacturing production and reports from the labour market, which all are expected to point at further strengthening of the Britain's economy. Moreover, on Thursday, Mark Carney will speak at the Annual Mansion House Dinner in London. He is unlikely to provide any bold statement, however, he can join hawkish analysts and economists, and point at stronger-than-expected growth. Even these words will provide a solid boost to the Sterling.
The IMF underestimated the strength of the Britain's economy, when it warned against the austerity programme, imposed by the government, Christine Lagarde admitted this week. One year ago, the U.K. government decided to cut its spending, and the IMF claimed they were "playing with fire". This April, the Washington-based lender claimed the economy will expand 2.9% this year– the fastest pace among the G7 countries.
Also Monday, economist from Morgan Stanley claimed the Bank of England will make the first rate hike in the first quarter of 2015, one quarter earlier than they have originally expected. Moreover, they are betting on two 25 basis-point hikes the same year. However, there is also a chance the central bank can start tightening its monetary policy already this year, as there is almost no spare capacity in the economy.
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