- Bank of England leaves rates unchanged
- Canadian inflation and retail data awaited
By David Johnson
The EU is being seen as rather mealy-mouthed and petulant in its Brexit proclamations. Brits will ‘apparently’ have to buy a £50 visa to visit the EU, we will be excluded from the EU arrest warrant system and the EU won’t share anti-terrorism intelligence after Brexit. No one benefits from keeping schtum on life-threatening terror plots and GCHQ is probably better than most at picking those up. So why threaten something so stupid as part of negotiating bluster? Such tosh!
August UK interest rate increase unlikely
In the financial markets, where petulance is entirely absent (…hmmm…hmmm…) the Bank of England (BoE) kept everything on hold yesterday but were also told they would get an enormous £1.2 billion uplift in funds from the Treasury for the BoE to use to support the UK financial system as Brexit approaches. One member of the BoE’s monetary policy committee did vote for a rate hike and some are seeing that as a herald call for an August interest rate rise. That would surprise me, I must say. Inflation is mildly above target and other economic indicators don’t point to any sign of overheating in the economy, so I suspect the rate hike pain might be further delayed. And if the BoE is being handed big money to keep the economy rolling, why would they tighten monetary policy at the same time? But what do I know?
Sterling pushed a little higher on both pieces of news, which was welcome after a troubled time recently, but the Pound didn’t go mad; €1.14 against the Euro and $1.3280 against the USD is still well within recent ranges, but some of the gain against the US Dollar was reflected in USD weakness elsewhere. Even the Euro pushed up to $1.1650. This morning brings a smattering of Purchasing Managers’ Indices from the EU, so we will watch those with interest.
Canadian Dollar could be volatile
There really isn’t a lot of other data to focus on today, but we will see retail sales and inflation data from Canada. The forecasts are quite mixed. Inflation is expected to have risen, but retail sales are forecast to show no growth at all. Some Canadian Dollar volatility is likely. The GBPCAD rate is bang in the middle of its recent range, so a fall back towards C$1.71 is a possibility, just as much as a push up to C$ 1.79.
Happy Weekend, sports fans!
And then it is the weekend. More football with England meeting Panama in the World Cup. England takes on South Africa to salvage some pride in the rugby and then we are all in prep mode for Wimbledon. It’s all go at this time, of year isn’t it? Have a great weekend, whatever you get up to.