GBP Higher After BoE Vote Surprise

The pound rallied yesterday on the BoE's more hawkish hold. Canadian data and OPEC are in focus today.

Previous Day's Market Highlights

The pound rallied yesterday after the MPC’s vote breakdown was more hawkish than markets had expected. Three of the nine committee members, including chief economist Andy Haldane, dissented in favour of raising rates. Two members had dissented at recent meetings, and this marks Haldane’s first vote to hike since the BoE raised rates in November. The voting shift and downplaying of Q1 economic weakness increased market expectations that a rate hike could occur as soon as August, although any move will ultimately be data dependent.
 
As a result, sterling jumped against the dollar, breaking back above 1.32 to move away from seven-month lows. A greater-than-expected drop in the Philadelphia Fed Manufacturing contributed to afternoon dollar weakness against both the pound and the euro. Euro-dollar regained 1.16 after earlier meeting support around 1.1510.
 
Sterling-euro regained 1.14. The pound is trading at some of its highest levels against both the Aussie and kiwi dollars in a month, while sterling-Canadian dollar inches closer towards eight-week highs, with 1.77 the next key level in sight.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1415 1.1498 1.1314 1.60%
GBP/USD 1.3287 1.3473 1.3102 2.75%
EUR/USD 1.1636 1.1853 1.1510 2.89%
GBP/AUD 1.7944 1.7981 1.7395 3.26%
GBP/NZD 1.9247 1.9339 1.8905 2.24%
GBP/CAD 1.7661 1.7661 1.7055 3.43%

Today's Market Highlights

Sterling has remained supported post BoE and this morning briefly tested 1.33 against the dollar, a level it’s held below for the past week. While markets continue to digest yesterday’s BoE vote surprise, OPEC announcements and Canadian data will also be of interest.
 
Investors will watch the latest OPEC headlines from today’s meeting to determine the future of current production limit levels. This would have implications for both commodity prices and commodity currencies.
 
Canadian Retail Sales and CPI will be closely watched as markets determine whether a July rate hike is in the cards. A pick up in headline inflation and core Retail Sales could prove supportive for the loonie. The US releases Markit Manufacturing and Services PMIs for June, which are forecast to be little changed to slightly softer.

Today's Economic Calendar

Time Currency Release Consensus Previous
24hr All OPEC Meeting
12:00pm GBP BoE Quarterly Bulletin
1:30pm CAD Retail Sales MoM (Apr) 0.0% 0.6%
1:30pm CAD Core Retail Sales MoM (Apr) 0.5% -0.2%
1:30pm CAD CPI YoY (May) 2.5% 2.2%
1:30pm CAD BoC Core CPI YoY (May) 1.4% 1.5%
2:45pm USD Markit Manufacturing PMI (Jun) 56.5 56.4
2:45pm USD Markit Services PMI (Jun) 56.4 56.8

Caxton