- Sterling rebounds on Bank of England vote pattern
- Greek deal fails to move Euro
Yesterday’s big surprise came from the Bank of England (BoE). Three of the current eight members of the Monetary Policy Committee voted for an interest rate hike in their meeting; an obvious sign of impending rate hikes. With inflation hitting 2.9% but wage growth struggling around 1.7%, the BoE is going to find it tough to justify penalising consumers with higher loan and mortgage costs. And, quite frankly, the BoE were above target inflation for many years before the 2007 crash, so this move by the three rebels doesn’t mean rates are definitely going up any time soon. So, Sterling’s bounce (a cent or so against the Euro and USD) stopped as quickly as it started.
Greece has agreed a deal to release a further tranche of its €86 billion bailout package, but the end is not in sight yet for the Greek economy. The International Monetary Fund (IMF) offered support ‘in principle’; a decision which should make the deal more palatable for German politicos, who will have to ratify the deal in a full session of government. The IMF was busy elsewhere yesterday; warning that EU countries with high levels of debt will face tougher borrowing costs when the European Central Bank (ECB) starts to unravel its Quantitative Easing (QE) purchases. That may be a statement of the obvious, but it’s a timely reminder that the EU is still in the mire – all except Germany, perhaps. This morning’s Eurozone Inflation data is just a final version of previously released estimates, so is unlikely to cause a major upset.
In fact, today’s data diary is slimmer than a Versace catwalk model. This afternoon does bring some US Housing Market data, but that is unlikely to cause more than a ripple in the value of the USD. The Dollar has been shifted by a fall back in the oil price, although that stabilised overnight.
And then it is the weekend and – for me – it’s all about the rugby. The British and Irish Lions tour kicks up a gear. Having played four teams so far and won only two of the games, the Lions need to show some form when they take on the Maori All Blacks tomorrow and I can’t wait. And England faces the Argentineans for the second time after a fantastic game last week, which England only won by the skin of their teeth.
My wife said making love on holiday is much more satisfying. That wasn’t the nicest postcard I’ve ever received.