Yesterday, the Bank of England left monetary policy unchanged, as expected. However, the meeting statement indicated that the BoE is getting closer to reducing rates. The vote breakdown on the MPC was 8:1 in favour of no rate changes, with two members no longer voting for an increase.
Furthermore, Governor Bailey has stated that rate cuts are “in play” at the next meeting. According to futures prices, the market believes the Bank of England will decrease interest rates in June by 80%. By the end of the year, 75 basis points of rate reduction will have been factored in. Against this backdrop, sterling has weakened.
Meanwhile, the flash PMI data for March showed that the US economy continued to grow at a rapid pace, while the Eurozone and UK readings were mixed, providing an additional lift to the greenback.
UK retail sales and consumer confidence numbers were announced earlier this morning. Retail sales stagnated in February, and consumer confidence remained constant at -21 in March. Later today, the German Ifo for March is due. Remarks from ECB Chief Economist Lane will also be of interest.