Newsletter – 11th May 2018

Morning Bulletin

Yesterday

  • GBP/EUR fell by three quarters of a percent yesterday from 1.1426 to close at 1.1343. This was despite better than expected manufacturing production data from the UK with the figure coming in at -0.1% vs -0.2% expected.
  • As expected the Bank of England kept rates unchanged at 0.5% and the monetary policy committee bank rate votes came in 7 in favour of no change and 2 in favour of a rate increase.
  • Bank of England Governor Mark Carney said that interest rates are likely to rise by the end of this year but did warn that if the economy slows then they will adjust the policy.
  • Sterling fell to a low of 1.1317 against the euro and 1.3460 against the US dollar following the Bank of England’s announcements however Carney’s comments did cause sterling to trim those losses.
  • From the US, CPI m/m and core CPI m/m both came in weaker than expected at 0.2% and 0.1% vs 0.3% and 0.2%, respectively. Unemployment claims came in better than expected however with a figure of 211K vs 219K.
  • Odds of a BOE August hike have now dipped to 50% whist odds of a hike by the year end is currently around 68% according to IGM.
  • Theresa May has split her cabinet into two groups to consider options for customs arrangements post-Brexit.
    • One group will consider a customs partnership whereby the UK would collect tariffs on behalf of the EU.
    • The second group will look at “maximum facilitation” which is a solution based on using technology to minimise the need for customs checks after Brexit (BBC News).
Overnight
  • Business manufacturing index came in from New Zealand at 58.9 having come in at 53.1 last time around.
  • GBP/AUD, GBP/NZD and GBP/JPY are currently trading at 1.7928, 1.9412 and 147.94, respectively.
Today
  • At 1.30pm we have employment change and unemployment rate from Canada.
  • At 2.15pm we are expecting to hear from ECB President Draghi as he is due to speak in Florence at the 8th edition of the State of the Union.
Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1344 +0.01
GBP/USD 1.3529 +0.10
EUR/USD 1.1922 +0.07
AUD/USD 0.7550 +0.26

 

Time (GMT) Region Data Release Forecast Previous
13:30 CAD Employment Change 17.8K 32.3K
13:30 CAD Unemployment Rate 5.8% 5.8%
14:15 EUR ECB President Draghi Speaks