Daily Economic Outlook: 6th August, 2015

Domestic market attention is set to focus on the BoE's policy decision and its revamped policy process, set to coincide with re-emerging fissures in the UK monetary policy debate. The 'Big Bang' at noon of the policy decision, MPC minutes - including the voting record - and the Inflation Report will compress the previous drip-feed of information into the market. The immediate focus will be on the vote, which seems likely to show 3 members voting for a 25bp hike in Bank Rate. 

With the potential for as many as 4 members preferring an immediate upward move, the market reaction could run against the more balanced narrative presented in the Inflation Report, released at the same time, and Governor Carney's  press conference at 12:45pm. Notably, the key conditioning assumptions for the BoE's updated projections in the August Report - including a stronger exchange rate, steeper yield curve and lower oil prices - are likely to push down the central inflation forecast, providing an offset to the minority's call for a hike, says Lloyds Bank.

Earlier in the morning, UK industrial production data for June could highlight weakness relative to ONS assumptions made for the preliminary Q2 GDP estimate. 

"With oil prices easing off substantially since May, North Sea oil output is likely to fall back after several strong months creating the headwind that underpins our expectation of a 0.1% production decline. German factory orders will also be closely watched for their implications for Eurozone production growth at the end of Q2", states Lloyds Bank.