Yesterday afternoon, The Bank of England’s Monetary Policy Committee voted to leave interest rates unchanged by a margin of 2-7. Two of the committee’s hawks, McCafferty and Saunders, backed an immediate rate hike to 0.75% due to the upside inflationary risks of increased wage growth. Immediate gains for Sterling were reversed as the MPC indicated that Brexit-related uncertainty is a continued and significant threat to the future growth of the UK’s economy. This being said, the chances of a May rate rise has increased significantly.
The EU received some positive news in that it would be temporarily exempt from the planned US steel tariff hike, a move that gives the region some much needed respite over fears of a trade war. This, however, did little to strengthen the Euro as Trump also announced plans to impose $50bn tariffs on Chinese imports to the US resulting in a wide-ranging sell-off of equities.
With no data to come out of the European session, the market will look for some fresh impetus later today on the release of US Durable Goods Orders, New Home Sales and speeches by Fed members, Bostic and Kashkari.