Bank of England stand pat, all eyes on US jobs report…
The BoE held rates steady at 0.75% yesterday, voting 9 – 0 in favour. The UK central bank maintained their stance on Brexit and (wrongly or rightly) are still working on the assumption of a smooth exit from the European Union. The Bank confirmed they still see interest rates as needing to rise gradually once the UK & EU have defined the route of departure.
The pound barely budged on the back of the announcement and press conference. Carney’s response to media questions were measured as well as calm. Some might say he was a little too relaxed bearing in mind we only have around 90 days left until the potential for a no-deal arises. Sterling moved within a 30pip range against both the euro and US dollar during this event. With the Bank essentially maintaining policy, the pound remains in the same situation as before – under pressure with a lot of uncertainty around the potential for renegotiation between the 2 regions.
Today’s highlight will be the US non-farm payrolls report. It would usually be the week’s highlight but after the events that have preceded, it can only be deemed a daily highlight! After the Federal Reserve cut interest rates for the first time in a decade on Wednesday, many will be keeping a close eye on the US economy to determine whether more accommodation will be required down the line. Today’s report is forecast to show 164,000 jobs were added to the US economy in the month of July. Employment is forecast to remain at 3.7% with average earnings at 0.2%.
Have a good weekend.
Written by Viv Savani. 8:28am, August 2nd 2019
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