Dovish BoE sends Sterling tumbling

UK Manufacturing Production m/m: 0.2%
BoE Inflation Report
MPC Official Bank Rate Votes: 1-0-8
UK Official Bank Rate: 0.50%
MPC Rate Statement
BoE Gov Carney Speaks
US Unemployment Claims: 270K

The Bank of England’s new and improved policy process was unveiled yesterday as we gained a flourish of tier one data, including the BoE inflation report, MPC minutes and a Mark Carney press conference. Shortly after, the US released another piece of high tier labour data in the form of unemployment claims.

Bank of England officials are at odds over when to raise interest rates after one member of the committee voted for an immediate rate hike today, less than expected. The UK economy continues to gain strength leading markets to believe that today’s minutes would show a 7-2 vote to keep rates on hold, this was not the case and an 8-1 vote was announced, sending Sterling tumbling against its major counterparties today. In terms of inflation, Mark Carney predicted a bout of “muted” inflation in the UK after all but one of the BoE policy makers decided that price pressures are too weak to raise interest rates for now.

Across the pond, the US released this week’s jobless claims figure. Filings for US employment benefits continue to hover around the lowest levels in four decades, another strong sign that the US labour market is improving. Jobless claims posted a slightly better than expected number of 270k.

BOJ Press Conference
CAD Building Permits
CAD Employment Change
CAD Unemployment Rate
US Average Hourly Earnings m/m
US Non-Farm Employment Change
US Unemployment Rate

The all-important non-farm payrolls are released this Friday. A strong US employment report here will be key for a possible September rate hike by the Fed. Two more solid numbers could act as a catalyst for an early rate rise. Non-farm payrolls are expected at 230k and unemployment should hold at 5.3% in July.