It’s early days yet but financial markets once again felt more composed yesterday as participants become more willing to take on risk. US stock markets put in their first back-to-back day of gains since the 12th February, this comes as global stimulus policies begin to take flight. The appetite for risk nudged the greenback lower with the pound attempting to push back towards $1.20.
Sterling had a volatile session yesterday which saw it trade in a 3-cent range against the buck for the majority of the day. Inflation data showed a modest downtick in the February consumer price index. The impact of GBP was almost non-existent. Instead, the pound was pushed around by the ongoing battle between the bulls and bears. The bears appear to have run out of steam after significant downside moves which has seen sterling reach lows of €1.05 and $1.1450 against the euro and US dollar, respectively.
It’s a big day for the pound today. UK retail sales are set for release in the morning which will be followed by a scheduled Bank of England monetary policy announcement. The Bank has already taken 2 emergency policy moves this month, which have seen interest rates slashed from 0.75% to 0.10% as well as the addition of £225-billion to their quantitative easing program. It’s unlikely they will make any further major policy adjustments. Investors will mainly focus on the accompanying meeting minutes which will reveal some insight on what the MPC discussed. The announcement and meeting minutes will all be released at midday.
The US will also be in focus today. The latest government stimulus package is heading to the House of Representatives for approval. Also, there’ll be huge attention paid to a weekly report which reflects the number of Americans seeking unemployment benefit. Jobless claims will be released at 1230 and could see a very sharp rise from the 300K market possibly to 2-million+. Many will be watching this number from the government, to banks to big business; this could be a key indicator of what’s to come.
8:12am, March 26th 2020
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