[Jason_Lim]

It is likely to be a quiet day in terms of news, with no data releases of any significance and the G20 meeting, the MPC minutes and FOMC meeting to come. The most likely to move markets is the MPC minutes, and there were two pieces of news yesterday from the BoE worth noting. The more important was the comments from MPC member Andrew Sentance, which stressed strong oil prices and the general pickup in the global economy. This broke a string of determinedly dovish comments from senior BoE officials. For all the discussion of the cut in the rate paid on banks' deposits at the BoE, the possibility of an increase in the quantity of QE purchased and so on, it is worth remembering that these are the minutes of a meeting that made no change in policy.

The BoE also made headlines in an article on the GBP, in which it discussed the possibility that GBP's long-run sustainable level might have fallen during the crisis. Two comments: first, it appeared in the Quarterly Bulletin, which is neither an MPC document nor attributable to any MPC member. It is, therefore, not an organ through which the MPC would likely make policy statements. Second, the GBP has depreciated nearly 25% in trade-weighted terms since the beginning of the crisis. The key point is where the reference is: market commentary appears to think it is relative to where the GBP is now; the article makes clear that it is the start of the crisis. To say that there was no possibility that the longer-run level to which the GBP will end up going has fallen over the past two years would have been an astonishingly bold statement. In general, the market has become too focused on the negatives for GBP. The discussions on that article are a good case in point.