Daily Market Brief – 6th August 2015

Super Thursday

Quote of the day: “With great power comes great responsibility”

August 6th: Highlights

  • BoE Rate decision
  • MPC Minutes
  • BoE Gov Carney Speaks
  • BoE Inflation Report
  • US Unemployment Claims

Sterling Comment

Super Thursday is not a questionable new comic book hero. Super Thursday is the new format adopted by the Bank of England. This will involve the rate announcement, the meeting minutes and press conference following at 12.45, and the Quarterly Inflation Report.

The minutes will be the main focus, looking for clarity over the votes and on who wants to raise rates. Expectations are for at least 8-1, maybe 7-2 (Martin Weale and Ian McCafferty are prime candidates). Anything more than that and Sterling could really take off, calling into question whether the UK might hike before the US (largely unexpected to-date). The inflation report will also be released at the same time and such a large volume of information released at once may cause some significant market fluctuations.

Sterling benefitted yesterday when independent research institute reported the BoE is likely to raise rates as early as Feb 2016. Attention was also on the NIESR forecasts, which showed 2015 economic growth forecasts reaching 2.5% in the UK, and this helped drive GBP to a 2-week high against the euro.

BREAKING NEWS: Initial market reaction batters Sterling across the board

Global Comment

Yesterday, the ADP employment report provided a pre-cursor to Friday’s Non-Farm Payrolls. It fell short of forecasts and weakened the USD. Increasing weakness in data like this will weigh against the case for a September rate hike when the Fed meet next after their August break.

Brace yourself for the BoE reaction now – we might need a superhero after all!

Have a great day!

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Paul Plewman

Paul Plewman
Director of Sales & Operations
t: +44 (0) 20 7096 1036
e: paul@currencytransfer.com


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