The Bank of England unanimously voted to keep interest rates unchanged at 0.75% after the MPC meeting finished yesterday. Bank of England head, Mark Carney in his quarterly inflation report raised growth forecasts from 1.2% to 1.5% and said inflation looks set to remain at current levels of circa 1.9% for the next 2 – 3 years.
The market is currently pricing in just one interest rate hike between now and 2021. Mr Carney did caution the market saying they are misreading the situation and rates could move higher and more rapidly should the Brexit situation be resolved.
This statement was softened by MPC member Broadbent this morning saying, the rate increases would be limited and gradual. The focus today will be the important services sector PMI number.
The Euro slumped yesterday after poor German retail sales numbers, with retail sales dropping 2.1% in the month of March compared to the prior year. German manufacturing numbers were disappointing on top of this.
The focus for the US Dollar today will be the much monitored and watched non-farm payrolls I.e. unemployment data. The average forecast is the US to have added 196k jobs in the month of April. The Dollar looks set for another strong performance this week after a positive tone form the FED earlier in the week.
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