The Bank of England (BoE) is widely expected to hold off on a rate increase for today's rate call, as the UK's central bank has had to walk back their hawkish tone recently in the aftermath of a wave of disappointing economic figures. As noted by Reuters, the BoE was set for a rate hike until just a few weeks ago.
Key quotes
"Now investors want to see if Carney tries to keep market expectations of an August rate hike alive when he gives a news conference shortly after the 1100 GMT (7.00 a.m. ET) rate announcement, or if he decides that hedging his bets is a safer strategy.
Since he joined the BoE in 2013, Carney has signaled several times that the time was nearing for rates to rise from the historic low of 0.5 percent reached during the 2008-09 financial crisis, only for economic data to go the wrong way.
Heavy snow slowed economic growth in much of Europe in March. But growth was weakest in Britain, where - less than a year before Britain is due to leave the European Union - Brexit-related pressures have squeezed consumer spending power and hurt firms’ willingness to sign off on major investments."
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Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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