Yesterday saw the Pound lose against the Greenback and the Euro as markets further digest the BoE’s meeting from last week. Mark Carney, the Governor of the Bank of England stated that all MPC members will see rates increase if any action is to occur. Although the markets are pricing this further out from happening in 2016 and nearer 2018. As inflation is expected to drag below 1% for 2016, this was not helped yesterday as commodity prices were also on the back foot with oil falling below the $30 a barrel putting more pressure on the inflation outlook.
Fears again gripped the equity markets as the bearish outlook for global growth and possible tactics of the world’s central banks came under scrutiny. As fears surround the likelihood of the ECB cutting rates further into negative territory, European equities crashed to a 16 month low. Bearish sentiment is the driver of this volatility as was also seen in the fall in the US. Stocks also fell as the worries increase on a weak overseas backdrop and more worry surrounds a rate increase. With mixed labour data on Friday we see the concerns are still high that the Fed will raise rates again this year.
Today will see the Trade Balance figure posted from the UK, where exports are expected to rise slightly over the imported goods, making sense of the weaker Pound. Further insight into the labour market will be seen later this afternoon as Jolts Job openings from the US is released, which will follow into Fed Chair Janet Yellen’s first day of the semi-annual testimony on Wednesday.