The Pound remains strong after BoE decision

Yesterday’s markets

15th April 2016

  • EUR Final CPI y/y: 0.0%
  • GBP MPC Official Bank Rate Votes: 0-0-9
  • GBP Monetary Policy Summary 
  • GBP Official Bank Rate: 0.50%
  • GBP Asset Purchase Facility: 375B
  • GBP MPC Asset Purchase Facility Votes: 0-0-9
  • USD CPI m/m: 0.1%
  • USD Core CPI m/m: 0.1%
  • USD Unemployment Claims: 253K
  • USD FOMC Member Powell Speaks
  • GBP MPC Member Shafik Speaks
  • AUD RBA Financial Stability Review

The Bank of England (BoE) took center stage yesterday as the Central Bank released their latest rate vote and decision. As expected, there were no surprises as the BoE kept rates at record lows of 0.5% and the asset purchase facility constant at £375B. The vote also remained unchanged at a unanimous 9-0 for rates to remain on hold. A Reuters poll of economists’ found that the BoE is expected to leave rates at 0.5% until 2017 as fears of slowing global growth and inflation keep a rate rise off the table. 

Across the pond, the US released a raft of high tier data in the form of CPI and Unemployment claims. Firstly US CPI (Consumer Price Index) gave markets an insight into the world’s largest economy’s inflation. The CPI figure was worse than expected at 0.1%, depreciating by 0.2% from the previous reading, showing the US is getting closer to deflation territory. Simultaneously, the jobless claims figure was better than forecast at 253k , matching a 42 year low. 

Today’s markets

14th April 2016

  • USD Empire State Manufacturing Index
  • USD Capacity Utilization Rate
  • USD Industrial Production m/m
  • USD Prelim UoM Consumer Sentiment
  • G20 Meetings

Today is the busiest day of the week in terms of data releases. Following the inflation release from the UK earlier this week, the Eurozone posts its y/y figure in the morning and is again set to remain in deflation territory at -0.1%. The US then follow suit in the afternoon with their m/m CPI gauge, with expectations set for prices to see an overall increase back to a positive figure. The ideal level for inflation is at the 2% mark. The price of oil and energy dropping this week has added further pressure on the CPI figures across the globe, thus cooling any rate rises to be seen in the near future.  From the UK, the Bank of England is set to deliver no surprises as they are expected to keep rates on hold at 0-9 and leave the current asset purchases unchanged as well.