Newsletter – 9th February 2018

Morning Bulletin

Yesterday

  • The Bank of England delivered a very hawkish message yesterday by saying that the cost of borrowing could increase faster that previously indicated. Interest rates were kept on hold as expected with the monetary policy committee voting unanimously in favour of keeping the base rate at 0.5%.
  • UK economic growth forecasts were also upgraded with GDP expected to grow by 1.9% in 2018 and 2019 – the previous forecast being 1.7%.
  • Sterling rallied off the back of this news and GBP/EUR and GBP/USD hit daily highs of 1.1450 and 1.4063, respectively.
  • The sterling rally was relatively short-lived however with both GBP/EUR and GBP/USD markets dropping off the highs to close at 1.1359 (up 0.39%) and 1.3911 (up 0.25%).
  • Sterling’s inability to maintain its value yesterday has been put down to Brexit with a Reuter’s poll published yesterday showing that forecasters generally think that Brexit concerns will start weighing on the pound and hamper several months of recovery (Independent)
  • Elsewhere Canadian NHPI m/m came in weaker than expected at 0.0% vs 0.1% and US unemployment claims came in better than expected at 221K vs 232K expected.
Overnight
  • The RBA monetary policy statement was released overnight and the document warned of rising inflation risks.
  • Chinese inflation matched expectations with both CPI y/y and PPI y/y coming in as expected at 1.5% and 4.3%, respectively.
Today
  • Sterling has had a strong start to the day printing up 0.4% on the US dollar and 0.17% on the euro.
  • At 9.30am we have manufacturing production m/m from the UK alongside the goods trade balance.
  • This afternoon we expect data from Canada in the form of employment change and unemployment rate.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1380 +0.17
GBP/USD 1.3966 +0.40
EUR/USD 1.2269 +0.18
AUD/USD 0.7789 +0.12

 

Time (GMT) Region Data Release Forecast Previous
09:30 GBP Manufacturing production m/m 0.3% 0.4%
09:30 GBP Goods trade balance -11.6B -12.2B
13:30 CAD Employment change 10.3K 78.6K
13:30 CAD Unemployment change 5.8% 5.7%