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.
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.