Home > Resource Hub > Daily Market News > Bank of England prepares to weather the storm

Bank of England prepares to weather the storm

Bank of England prepares to weather the storm

As expected there was no change, and no votes for change, in UK Interest Rates yesterday. The Monetary Policy Committee (MPC) meeting minutes revealed great concern about the upcoming EU Referendum and the Committee will be viewing subsequent economic data releases very cautiously as a result. This may be code for “all decisions on hold until after June 23rd”.

Sterling failed to make headway despite greater risk appetite (caused by better than expected Chinese data) and firm commodity prices, perhaps suggesting another Sterling selloff in the event global risk appetite deteriorates again.

In the US, consumer prices rose less than expected in March and underlying inflation slowed. The consumer price index gained just 0.1% last month, against the market consensus of a 0.2% gain. The disappointing data seemed to vindicate Janet Yellen’s recent warnings about the pace of U.S. growth and inflation.

The Dollar still managed to make gains yesterday as the labour market continued to show signs of strength with US jobless claims coming in at 253k, down from 266k the previous month and below the expectation of 270k.

Cable opened yesterday at 1.4205, before the Dollar bulls pushed the pair down to the 1.4100 level in the morning. The Dollar couldn’t break through that level as the inflation data seemed to halt any momentum. The pair traded sideways around the 1.4150 level for the remainder of the day and opened this morning at 1.4156.

EURUSD lacked volatility yesterday, with the Dollar showing marginal gains against the single currency. The pair opened this morning at 1.1265, only a 0.08% drop from Thursday’s open.

Data releases from the Eurozone were positive in yesterday’s trading session as GBPEUR fell by 0.3 %. Consumer Price Index data beat expectations at 1%, an improvement on February’s figure of 0.4%. The result was bullish for the Euro as it trimmed down the gains made earlier in the week by the Pound. The Spring meeting of the IMF (International Monetary Fund) will begin and most likely topics will be “a potential Brexit” and the “Panama Papers”. As the IMF has already grabbed headlines with Brexit-related statements, risk appetite will be susceptible to negative outlooks.

Data to watch – 10am Euro February Trade Balance. 2.15pm US March Industrial Production & March Capacity Utilization. 6pm Baker Hughes US Oil Rig Count.

Share this case study
Set yourself up in minutes, make payments the same day: it’s free, easy and without obligation.