GBP improves vs USD
Sterling has managed to claw back some of the losses it made following the shocking GDP data on Tuesday. This was helped on part by the release of the minutes from the last Bank of England policy decision which showed another member had joined Andrew Sentance in calling for a 0.25% rise in rates. Should this have come out before the GDP figures were released it would have been a great boost for sterling but as the members were not privy to the GDP data when making the decision. Expectations for a rise in February have dropped and most of the members will be waiting for some more data to come out before committing one way or the other. BoE governor King’s very dovish speech on Tuesday night did not rule out rates staying at 0.5% for the remainder of 2011 which would be pretty poor for Sterling, especially if the Eurozone and the US were looking at or increasing their reference rate.
Last night we also had a speech from the FOMC, the people responsible for the rate decisions in the US, which also had a pretty dismal outlook for the US economy although there were some areas where economic activity were improving including household spending and investment spending but the speech did little to support the dollar.
Looking forward to today we have the European Monetary Union confidence figures at 10am then the CBI trade survey at 11am followed by some employment data for the US this afternoon but tomorrow will be the highlight with US GDP out and with the USD already on the back foot, investors will be watching these figures closely.