Dissent within the MPC assists sterling gain
The minutes of the Bank of England’s last monetary policy committee meeting were released yesterday. For the first time since it’s inception eight years ago, Mr Mervyn King, the MPC governor, was outvoted 5-4 in favour of cutting rates by 25 basis points to 4.5% in August.
The closely divided vote emphasised that the cut was more of an anomaly, and reinforced the market opinion that rates will now likely remain unchanged for the rest of the year.
Data from the National Statistics office confirmed the continued softening of the UK labour market in July. For the sixth consecutive month new claimants numbers rose.
The pound reached six-week highs against the euro, gaining 0.5% to £0.679. This was notably the highest since before the bomb attacks on July the 7th. Sterling reversed earlier losses against the dollar to finish flat at $1.8098.
The dollar remained range bound following the stronger than expected US PPI numbers released yesterday. The producer price inflation data saw the headline rate rising 1.0% in July. This was twice as fast as was anticipated by the market. The main reason for the rise was the souring price of energy. Many are now asking how long US retailers can continue to absorb these higher costs.
Key economic data due out today include UK retail sales (9.30am BST). The expectation is that July will see a contraction of 0.8% bringing annual retail sales growth to 1.8%. EMU CPI inflation is expected to show a 0.1% increase to 2.2% for June. Also due out today are US jobless claims (estimate of 315k) and industrial production for June. The market is expecting 0.3% in US manufacturing.
The closely divided vote emphasised that the cut was more of an anomaly, and reinforced the market opinion that rates will now likely remain unchanged for the rest of the year.
Data from the National Statistics office confirmed the continued softening of the UK labour market in July. For the sixth consecutive month new claimants numbers rose.
The pound reached six-week highs against the euro, gaining 0.5% to £0.679. This was notably the highest since before the bomb attacks on July the 7th. Sterling reversed earlier losses against the dollar to finish flat at $1.8098.
The dollar remained range bound following the stronger than expected US PPI numbers released yesterday. The producer price inflation data saw the headline rate rising 1.0% in July. This was twice as fast as was anticipated by the market. The main reason for the rise was the souring price of energy. Many are now asking how long US retailers can continue to absorb these higher costs.
Key economic data due out today include UK retail sales (9.30am BST). The expectation is that July will see a contraction of 0.8% bringing annual retail sales growth to 1.8%. EMU CPI inflation is expected to show a 0.1% increase to 2.2% for June. Also due out today are US jobless claims (estimate of 315k) and industrial production for June. The market is expecting 0.3% in US manufacturing.
posted by Drs Search @ 8:33 AM
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