Today’s key event is the Bank of England policy announcement at midday. It is expected that the Bank of England will hold rates ate 5.25 percent – a 16 year high.
Yesterdays Inflation figures fell further than anticipated, therefore potentially putting pressure on the Bank to bring forward their interest rate expectations.
Markets will be eager to see how the policy members vote as this will potentially give clues to when the bank may cut interest rates.
We have seen a stronger pound over the past 3 months, due to market expectations that the BOE will cut rates later than the Fed and the ECB. This could change over the next few months.
Markets will also focus heavily on tomorrows Retail Sales figures for the UK following today’s events. Retail Sales have been somewhat mixed of late but did pick up last month.
Purchasing Managers Index figures in the manufacturing and services sector are set to be released this morning in the EU, UK, France and Germany. Across the board all figures are forecasted to show expansion from their previous releases, apart from the UK PMI services data set to slightly fall.
Yesterday evening, the Fed held interest rates in a range of 5.25% – 5.5%. Fed Chairman Jerome Powell voiced that a 25-basis point rate cut in June is on the cards, followed by two additional 25-basis point cuts throughout the year.
Jerome Powell’s speech has positioned the Dollar on the backfoot falling 0.6 percent against the Pound and 0.5 percent vs the Euro. GBPUSD has moved to 1-week high sitting 100 basis points above the year-to-date average moving rate.
