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Super Thursday – Focus turns to UK elections and BOE policy statement

Super Thursday – Focus turns to UK elections and BOE policy statement

GBP

Global risk appetite remained firm yesterday which reduced selling impetus for Sterling, and complimented the expectations of an optimistic Bank of England policy statement today. However, potential Sterling support was offset by political uncertainty and caution ahead of the Scottish parliamentary election and local elections across the UK.

The Pound held above 1.3900 to the Dollar while the Euro retreated to near 1.1590. Markets expect that the Bank of England will hold interest rates at 0.1% but could announce a tapering of bond purchases, and growth projections are likely to be upgraded, but caution is also likely to be a feature.

Sterling opens close to 1.3900 to the Dollar this morning while the Euro strengthened slightly to 1.1580.

 

USD

ADP data recorded an increase in private-sector payrolls of 742,000 for April, below consensus forecasts of 800,000, although there was an upward revision to the March increase to 565,000 from the original estimate of 517,000. Markets expect another strong employment report on Friday.

The PMI services-sector index was revised to 64.7 from the flash reading of 63.1 and this was the strongest reading since the data series began in late 2009.

The ISM services-sector index declined slightly to 62.7 from 63.7 and below markets expectations of 64.0, although this was still a historically strong rate of growth. There was also a slowdown in the rate of growth in new orders and business activity. There was, however, a faster rate of employment growth for the month while prices increased at the fastest rate since July 2008 with increases across all industry sectors.

The data did not shift the US narrative significantly with expectations of strong growth and rising inflationary pressures. 

 

EUR

The Euro is pressuring a move lower against the Dollar to around the 1.2000 mark. The downside move will likely test the two-week low of 1.1986, as the US currency catches a fresh bid amid worsening market mood.

The subdued price action in the US is keeping the single currency relevant heading into a data-busy day ahead. Due for release today we have Germany’s March Factory Orders figures while the EU will release March Retail Sales. 

As of writing, the Euro currently trades around the 1.2020 mark against its US counterpart. 

 

Data to watch

09:30 – GBP – Final Services PMI

12:00 – GBP – Asset Purchase Facility

12:00 – GBP – BOE Monetary Policy Report

12:00 – GBP – MPC Asset Purchase Facility Votes 

12:00 – GBP – Monetary Policy Summary

12:00 – GBP – MPC Official Bank Rate Votes

12:00 – GBP –  Official Bank Rate 

12:15 – EUR – ECB President Lagarde Speaks 

13:30 – USD – Unemployment Claims

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