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Super Thursday weakens the Pound

  • GBP - Manufacturing Production m/m: -0.6%
  • GBP - BOE Inflation Report
  • USD - PPI m/m:0.5%

It was Super Thursday yesterday, as the Bank of England announced their monetary policy decision and updated their inflation forecasts. As expected, the BoE left rates on hold at 0.25% and kept bond buying at a constant £435bn. However, the voting pattern, which some expected as 6-2 was announced as 7-1 in favour to keep rates steady. Sterling weakened after the release, breaking and holding below a key level of support.

The Quarterly inflation report and Carney led the press conference followed shortly after. The central banks inflation forecasts are a touch higher and the BoE suggested that a tighter policy may be needed despite what the yield curve implies. The BoE also said that “others on committee said it would not take much upside news to switch position”. However, Sterling depreciated as ultimately rates were left on hold and the Bank trimmed its 2017 growth forecasts.

In other news, the US released two pieces of high tier data yesterday. Both figures exceeded market consensus with unemployment claims posting 236k as the labour market continues its bullish run. US PPI was released simultaneously, as markets gained an insight into inflation in the States. The producer price index registered a four-month high of 0.5% as prices continue to rise in the US.

  • ALL - G7 Meetings
  • USD - CPI m/m
  • USD - Core CPI m/m

Markets will not have too much time to digest yesterday’s Bank of England decision as we have a raft of high tier releases on the data slate. Firstly, it is day one of the G7 meeting in Italy. With such political change over recent months (Trump, Macron and May all new faces) this meeting will be closely watched to see how relationships between the countries progress.

In the afternoon, the US release their CPI (consumer price index) reading and last month’s retail sales figures, both forecast to improve on April’s readings.