BoE, Mansion House Speeches to Drive Pound

The BoE's latest policy guidance and Mansion House speeches from Carney and Hammond are key today.

Previous Day's Market Highlights

Sterling rallied slightly in the afternoon session after Prime Minister May’s Brexit vote victory. Investors had been concerned that a defeat could increase the chances of a challenge to May’s leadership, adding to political uncertainty. Sterling-dollar pulled back above 1.32, recouping some ground from the previous day’s seven-month low. However, it gave up those gains overnight. Euro-dollar continued to hold below 1.16 and sterling-euro gained back towards 1.14.
 
Elsewhere, Fed Chair Powell was hawkish during comments at the ECB’s Forum on Central Banking, saying there is a “strong” case for more rate hikes in the US. The Fed’s median view now anticipates a total of four rate hikes this year, as opposed to three.
 
Sterling hit a seven-week high against the Canadian dollar before paring gains.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1377 1.1498 1.1314 1.60%
GBP/USD 1.3129 1.3473 1.3125 2.58%
EUR/USD 1.1541 1.1853 1.1510 2.89%
GBP/AUD 1.7864 1.7970 1.7395 3.20%
GBP/NZD 1.9225 1.9397 1.8905 2.54%
GBP/CAD 1.7489 1.7575 1.7055 2.96%

Today's Market Highlights

The main event today is the Bank of England’s latest policy decision (12:00 BST). The BoE is expected to keep interest rates on hold at 0.5% by an unchanged vote of 7-2. The Bank will likely keep the door open for a rate hike later in the year, depending on how data perform in the intervening time. Investors will closely parse the statement and vote breakdown for any changes that could provide policy hints or clues to the timing of a possible rate hike.
 
In particular, they will look for any signals that August is in play amidst concerns over slow Q1 growth and political uncertainty. A relatively cautious view could weaken the pound, while any upbeat signals could instead give it a boost.
 
In the US, Initial Jobless Claims are expected to remain largely unchanged at 220K, while the Philadelphia Fed Manufacturing Survey is expected to dip from 34.4 to 29.0. In the evening, BoE Governor Carney and Chancellor Hammond will deliver their Mansion House Speeches. Markets will pay close attention to these speeches for any further monetary policy and Brexit clues.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:30am GBP Public Sector Net Borrowing (May) £5.00B £6.23B
12:00pm GBP BoE Interest Rate Decision 0.5% 0.5%
12:00pm GBP BoE Monetary Policy Summary & Minutes
1:30pm USD Initial Jobless Claims (8 Jun) 220K 218K
1:30pm USD Philadelphia Fed Manufacturing Survey (Jun) 29.0 34.4
2:00pm USD Housing Price Index MoM (Apr) 0.3% 0.1%
3:00pm EUR Preliminary Eurozone Consumer Confidence (Jun) 0.0 0.2
9:15pm GBP BoE Governor Carney's Mansion House Speech

Caxton