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February

'Super Thursday’ provides more positive economic forecast for UK and boost for Pound

Published: Friday 09 February 2018

  • Stock markets struggle again
  • Euro benefits from better than expected German data
By Ricky Nelson

The highlight of yesterday’s data releases was the “Super Thursday” simultaneous release of the Bank of England (BoE) interest rate decision, the minutes of the recent meeting and the inflation report. The BoE voted unanimously to leave rates at 0.5% with no addition to bond purchases as expected.
 
The bank also updated their forecasts and now expects the economy to grow slightly faster than they projected back in November and they also feel that inflation may be slightly higher over the next couple of years. It was clear that the Monetary Policy Committee (MPC) are considering raising rates and it could be fairly imminent, stating that, “ Monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period”. Unambiguous, particularly for a central bank.  Markets are now pricing in a 75% chance of an interest rate hike in May; and it could arrive even sooner. Sterling rallied on the news; and unless we have a major political setback, or Brexit concerns intensify, it could remain steady.
 
Stock markets struggle again
 
Risky assets and indices took a bit of a beating overnight on heavy selling pressure in Asia. Chinese shares were down almost 6% and the Nikkei fell over 3% before recovering slightly. The Dow is now 10% lower from its highs and close to an official bear market. With the risk off trade back in vogue, the US Dollar has benefited and we await the US open to see if the rout will continue.
 
Euro benefits from better than expected German data
 
The Euro rallied early yesterday on the back of better than expected trade data from Germany and comments from European Central Bank (ECB) officials, before falling back as risk aversion took hold. ECB members seem unconcerned over the recent rise in value of the single currency, therefore the Euro is likely to remain in a tight trading pattern with its major currency counterparts in light of the dearth of economic data due today.
#FridayFeeling

What breed of dog can do magic tricks? A Labracadabrador!
Why do cows wear bells? Because their horns don't work.
What do you call a bear in the rain? A Drizzly Bear.
What do you call a bear with no teeth? A Gummy Bear.

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 09:30 UK: Manufacturing Production 0.4% 0.3%
GBP 09:30 UK: Goods Trade Balance -12.2b -11.6b
GBP 09:30 UK: Construction Output 0.4% 0.0%
GBP 09:30 UK: Industrial Production 0.4% -0.9%
CAD 13:30 Canada: Employment Change 78.6k 10.3k
CAD 13:30 Canada: Unemployment Rate 5.7% 5.8%

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news