- The Bank of England kept interest rates on hold for a fifth consecutive meeting, with none of the nine members of the MPC voting for a hike for the first meeting since September 2021. The decision to keep the base rate unchanged was widely expected, however two hawkish members joined six colleagues to vote for a hold, while one voted for a cut. Governor Andrew Bailey, who was armed with the improved February CPI print said that inflation was “moving in the right direction” however he reiterated that, “we’re not yet at the point where we can cut interest rates.” Nevertheless, the shift in voting pattern suggests that the central bank is edging closer to its first cut. The market continues to believe that the earliest the BoE will be able to move is at the June meeting, with three cuts of 25 basis points currently priced in this year. However, a lot rides on the Federal Reserve, will many economists suggesting that the Fed will be the first of the big three central banks to cut. That said, the Swiss National Bank surprised many in the market yesterday announcing a cut to its key interest rate. The SNB became the first of the major global central banks to cut policy rates, seemingly some months ahead of its peers.
- The BoE and the UK government received further positive news this morning with Retail sales coming out stronger than expected in the first two months of the year. Whilst the volume of goods sold in shops and online was unchanged last month, January’s data was revised up, suggesting that consumers are starting to shake off the hardship felt from the cost-of-living crisis.
- EURUSD is a little lower this morning but continues to trade on a 1.08 handle and comfortably above key support at 1.0790. This morning, we await the release of the German IFO survey and speeches from several ECB speakers, none of which are likely to shake EURUSD out of its recent trading range.
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