Money News Overview Friday 2nd August: US payrolls conclude a busy week.

Yesterday, the BoE MPC voted 5 to 4 in favour of a 25bps rate drop. In the run-up to the announcement, markets anticipated a close call, with pricing leaning slightly towards a rate drop.

Yesterday, the BoE MPC voted 5 to 4 in favour of a 25bps rate drop. In the run-up to the announcement, markets anticipated a close call, with pricing leaning slightly towards a rate drop.

Meanwhile, the meeting summary, minutes, and press conference provided virtually little insight on the future course of policy.

Data-wise, the US manufacturing ISM for July fell considerably below the consensus of 48.8, to 46.8. New orders and employment were very low this month.

Meanwhile, US first unemployment claims increased to +249k, the biggest amount in nearly a year. In the Eurozone, the unemployment rate increased to 6.5% in June (compared to 6.4% forecast).

Yesterday, market rate expectations fell as a result of the BoE’s move to decrease interest rates and data disappointments in the United States and Europe. The Eurozone is forecast to ease policy by around 55 basis points between now and the end of the year, while rate cuts of 85 basis points and 40 basis points are priced in for the US and UK, respectively.

Looking ahead, payrolls are predicted to grow by 175k, down from +206k in June, while the unemployment rate remains at 4.1%. The announcement may affect the dollar.

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