On Thursday comments from governor of the Bank of England weighed on the pound, with the sentiment following through into European trade on Friday. The pound weakened to the lowest value against the US dollar since July 2013. Disappointing data released by the ONS, showed that construction output had collapsed by 2.6% in January compared to December. Next Wednesday (18 March) the Bank of England releases the minutes from their meeting held on 4 and 5 March. The March rate announcement…

Governor of the Bank of the England spoke at the University of Sheffield Advanced Manufacturing Research Centre and dampened market expectations of policy tightening. Carney explained that the Bank expected interest rates to return to target (2%) within 2 years, which is significantly higher than January’s record low reading of 2%. The rhetoric from MPC members has been confusion for traders attempting to gauge the expected timeframe of policy tightening. UK interest rates have r…

The Eurozone’s single currency seems to be heading towards parity against the US dollar, starting the year above 1.20, now trading 1.0650. In March 2014 EURUSD traded just shy of the 1.40 mark, the story is driven by the divergence in economic situations between the US and the European periphery. Following Draghi’s announcement of QE the sentiment towards the Eurozone has turned sour. Greece’s potential exit from the single currency has unnerved investors with the cur…

The US Department of Labor will release their monthly employment report, Non-Farm Payrolls at 13:30pm (London). The pivotal data is usually released on the first on the first Friday of each month, and is a good barometer of the health of the US economy. The figures vary widely, causing significant volatility at the time of release as traders react to the figures. The market consensus is for the Fed is to begin tightening in June with economy growing Yellen will begin exiting the ultra-…

At noon the Bank of England’s Monetary Policy Committee (MPC) will announce if there is a change to interest rates or the asset purchase programme. The current base rate is 0.5% and today’s announcement marks six years since the MPC cut interest rates to the record low. The expectation is a vote for rates and QE (£375bn) to be left unchanged. The Bank of England’s MPC remit is to target 2% inflation, over the last few years the economy consistently overshot as t…

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The latest indicator for the UK economy; Markit Services PMI (Feb) 56.7 vs consensus of 57.4, this follows beats in manufacturing data. Following the release GBPUSD has been offered and weakened against the US dollar. Prior to the release GBP reached a new 7 year high against the Euro. The figure service sector growth is still a strong figure, however it is slightly below expectations. A positive from the data release was the that “new business increased at sharpest pace for thre…

Over the last few decades Chinese growth figures have been the envy of central banks around the globe. The back-to-back years of double digit GDP have now slowed to “only” around 7%. Recent macro data from China has disappointed markets, with the indicators pointing to a further slowdown in economic growth. The expansion has been coupled with inflation, however data released in January reported a 5 year low. On the 4 February the PBOC attempted to stave off a further slowdo…

Macro Outlook UK General election A major potential risk for Sterling over the short to mid-term is the potential of an inconclusive majority in government with the coalition discussions being drawn out. The recent polls for the election don’t show a conclusive majority for either of the major political parties, with one of the minor parties expected to be the maker of any coalition leadership. Bank of England rate hike The market has priced in a rate hike for Q…

The Bank of England minutes for 4 and 5 February headline announcements were as expected, the MPC voted unanimously (9-0) to leave interest rates and quantitative easing unchanged. The current ultra-loose monetary policy is interest rates at the record low of 0.50% and asset purchases (QE) at £375bn. The ONS released the ILO Unemployment for February with the rate dropping to 5.7% below expectations of 5.8%. The UK claimant count fell to 823,000 in January, lowest since May 2008,…

The latest inflation data released from the ONS shows is the lowest in 25 years, well below the Bank of England’s target of 2%. During the height of the economic crisis, inflation continually overshot the central bank’s target at a time of austerity and increases in unemployment. Wage stagnation and high inflation led to a squeeze on wage growth and played its part in a slow economic recovery. When inflation overshoots targets the normal practice is to raise interest rates…

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