He’s going down! Mr. British Pound for sure as Bank of England decided to keep key rate at record low.
The Bank of England (BoE) held its benchmark interest rate steady Thursday, marking six years since officials cut borrowing costs to record-low levels to combat a deep recession.
The BOE said its rate-setting Monetary Policy Committee kept the central bank’s benchmark rate at 0.5%, after its monthly policy meeting. The panel also agreed to leave the size of the BOE’s bond portfolio unchanged at £375 billion ($572.4 billion).
But going even lower is Mr. Euro as he reached a decade low level at the 1.10 level. The moves lower seem to be a result of investors – and given the size of moves, possibly central banks – getting out of the way of today’s ECB meeting where plans will be confirmed for the QE programme.
Earlier in the day we saw UK and European PMI numbers for the services sector come in lower than January, but only marginally and with some positive news for the UK. The PMI report attributed the increase in costs within the sector to a growth in wages, which is a focus of the Bank of England’s, where wages have been left to play catch up with rising employment. The combined PMI readings show that the UK is on track to achieve 0.6% growth in the first quarter of this year, ahead of target and up on Q4’s 0.5% figure.
The ECB will be the main focus. Investors want to know when they’ll start buying and what they’ll start buying (short date, medium, long etc.) WE also expect to hear Draghi reiterate that QE cannot be the only cure to Europe’s problems and that structural changes must be made. We might get some comments from him on Greece, but whilst the situation is still at stalemate, he’ll have to choose his words very carefully.
As well as the ECB, we get to see a lot of European economic data and also some big numbers from the US, ahead of tomorrow’s all important non-farm payrolls. The Bank of England also have a rate announcement, but there will be no change there. Stock markets are all hovering around their record highs, and it will be interesting to see if we get enough momentum to get above those highs and close the week’s trading above those highs. European markets will be the ones that have the most potential upside today and could fly on the right tone struck by Draghi.
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