Interest Rates Kept on Hold
As widely predicted, the MPC kept interest on hold yesterday. We are awaiting Industrial Production reports which economists are confident will show an increase for a third consecutive month for November which could see GBP show weekly gains again. Indeed, GBP has risen 0.2% against the Euro since January 3rd. We have also seen UK retail sales rise by 0.4% in December which is an increase for the 8th consecutive month.
The Canadian Dollar is continuing to weaken under speculation that slowing economic growth will force the Bank of Canada to consider lowering interest rates. This has seen CAD reach its weakest level since 2009.
Yesterday, Mario Draghi and the ECB also kept the interest rates on hold. As ever, it was what he said in the press conference that was of more importance. He mentioned how the ECB would not be afraid to act if money markets rates rose or if the inflation outlook worsened.
The markets as a whole are pretty much on tenterhooks today as we wait for the US Non-Farm Payrolls data to be released. Seen as the most important piece of economic data, this has the ability to move currency rates more then anything else.