- Sterling came off sharply yesterday after the Bank of England’s Inflation Report maintained a neutral bias.
- Traders pushed sterling higher in the lead up to the release with the belief that it may have contained an indication that rates may be raised towards to the end of the year. (PoundSterlingLive)
- This belief was unfounded however as the report stated that ‘monetary policy can respond, in either direction’.
- GBP/EUR fell by 0.9% closing at 1.1644 after an open of 1.1750 and GBP/USD fell by just over 1%, closing at 1.2527 after opening at 1.2655.
- The Bank of England kept rates unchanged as expected with the Monetary Policy Committee voting unanimously in favour of keeping the base rate at 0.25%.
- Earlier in the day we saw UK construction PMI fall short of expectations at 52.2 vs 53.9 expected.
- Elsewhere US unemployment claims beat expectations at 246K vs 251K expected.
- EUR/USD briefly traded above its 1.08 level before it lost momentum and closed slightly down on the day at 1.0758.
- Caixin Manufacturing PMI from China came in slightly short of expectations at 51.0 vs 51.8.
- Most of today’s data comes from the US with the publication of average hourly earnings m/m, non-farm payrolls and unemployment rate at 1.30pm.
- Before that we Services PMI data from the UK with an expected value of 55.8.
- At 3pm we have the last data before the weekend in the form of ISM non-manufacturing PMI from the US.