GBP: Bank of England more important than elections
EUR: Single currency under attack from data elsewhere
USD: Payrolls due tomorrow
Thursday is finally here and with it comes a huge dollop of event risk for the pound. The Bank of England releases its latest monetary policy report and rate decision at noon and all eyes will drill down into any language that hints at a withdrawal or slowing of the stimulus for the UK economy to ease it out of the pandemic.
Should that come, sterling could be set for a strong day and would likely break out of this funk that has sat over the pound for a number of weeks. There is the chance that the BOE disappoints however, stating that inflation pressures are transitory, that the closure of the furlough scheme will eventually see a slowing of the UK consumer spending that has typified the past month on the UK’s High Streets.
My money is on cautious optimism and a slight rally in sterling, especially should local election results show that most people north of the Scottish border do not want the independence question asked again any time soon. Results in London, Birmingham, Teesside, Wales or anywhere else are not market movers.
Once again there is not much data from Europe today with focus instead falling on central bank movement in and around Europe. Apart from the Bank of England we also have the Norges Bank and their communications have opened up the chances of an interest rate hike by the end of the year. If they double down on this today we could see EURNOK, EURGBP and EURUSD all remain under pressure through the rest of the week.
Today is not a day to focus on the USD; that will come tomorrow in the form of the latest payrolls numbers. Market tensions between China and Australia have picked up again overnight, hurting market sentiment a little but impact in currencies has fallen on the AUD and other currencies that trade predominantly with China.
As noted above, the AUD has fallen the most overnight on headlines that China is pausing all economic activities with Australia under the terms of the China-Australia Strategic Economic Dialogue. The gesture is largely symbolic but shows the extent of the decline in relations between the two countries.
Today’s interbank rates at 08:22 against sterling. Movement vs yesterday.
|US dollar||$1.390 ↑|
|Australian dollar||$1.794 ↓|
|South African rand||R19.91 ↑|
|Japanese yen||¥152.0 ↑|
Have a great day.