Sterling remains fragile after bullish labour data

Yesterday’s markets

17th March 2016

  • GBP Average Earnings Index 3m/y: 2.1%
  • GBP Claimant Count Change: -18.0K
  • GBP Unemployment Rate: 5.1%
  • GBP Annual Budget Release
  • USD Building Permits: 1.17M
  • USD CPI m/m: -0.2%
  • USD Core CPI m/m: 0.3%
  • USD Crude Oil Inventories: 1.3M
  • USD FOMC Economic Projections
  • USD FOMC Statement
  • USD Federal Funds Rate: <0.50%
  • USD FOMC Press Conference

Yesterday was a key day for the future of the Pound as not only did we have a raft of labour data released but we also saw the Annual Budget announced yesterday afternoon. Firstly, labour data from the UK was bullish, with the claimant count and average earnings exceeding expectations, whilst unemployment remained at decade lows of 5.1%. However, movement was relatively subdued after these releases as traders remained cautious ahead of the UK 2016 Annual Budget. The Annual Budget was a relatively tame affair, the Chancellor played on the morning’s bullish labour data and also threw in the odd warning of the risk of Brexit in his speech.

Across the pond, the US released a raft of high tier data, including building permits, industrial production and the closely watched consumer price index. Building permits and industrial production both failed to meet expectations, with building permits dropping to 1.17m and industrial production falling into negative territory. US core CPI, however posted a better than expected 0.3% as prices rise in the world’s largest economy.

Today’s markets

16th March 2016

  • JPY BoJ Gov Kuroda Speaks
  • GBP MPC Official Bank Rate Votes
  • GBP Monetary Policy Summary
  • GBP Official Bank Rate
  • GBP Asset Purchase Facility Votes
  • USD Philly Fed Manufacturing Index
  • USD Unemployment Claims

No policy changes are likely today, but with the Bank of England looking increasingly dovish there is the possibility we may get further talk of interest rate cuts rather than increases. Following this, the US releases their Philly Fed Manufacturing index, forecast to tick slightly higher but remain in negative territory at -1.4.