What’s coming from the Bank of England today?

Probably nothing.

Not because of the fact that the bank isn’t prepared to action or the UK economy doesn’t need support, it is because of the simple reason that it is too early. It is too early to judge what kind of stimulus the economy needs for the central bank to provide so. There are currently two tools at the disposal of the Bank of England (BoE), interest rates and quantitative easing and when we say “probably nothing” we are meaning these two tools.

So, what we mean the bank of England (BoE) is likely to announce some measures other than the two currently deployed. There are few things the bank will likely to ensure even before it moves ahead with stimulus and those are,

• There is no domestic liquidity pressure. In this front, the central bank may announce some temporary liquidity measures and reduce the reserve requirements. It may also announce some auctions.
• Second key point is to ensure that there is no foreign exchange liquidity crunch. The central bank has kept all of its swap lines ready if required since the referendum. We expect the bank to address the issue.
• Its biggest concern will be the flow of credit to ensure that there are no credit crunches in the banking system. To ensure ample credit available the bank may go for some credit lending schemes to address this issue.

Saying all this it is only fair to add that there is some possibility that the central bank may choose to increase its asset purchase from £375 billion to £400-25 billion in order to provide liquidity.

We expect August to be more happening compared to July’s just as BoE governor Mark Carney said, "In August, we will also discuss further the range of instruments at our disposal,"

The pound is currently trading at 1.324 and it is likely to rise if BoE waits it out.