GBP Reverses Knee-Jerk BoE Jump

The BoE kept rates on hold but two members dissented. Trade war concerns continue to weigh.

Previous Day's Market Highlights

While the Bank of England kept interest rates on hold as was widely expected, two MPC members dissented in favour of hiking rates, a more hawkish shift from February’s consensus hold. This saw a knee-jerk move higher in sterling, which broke 1.15 against the euro to hit its highest levels since June 2017, and 1.42 against the dollar, its highest levels since 2 February. However, sterling quickly retraced those gains, as well as earlier gains made on above-forecast Retail Sales, and fell back towards 1.1450 and below 1.41, respectively.
 
Elsewhere, disappointing PMIs weighed on the euro earlier in the day. Trade warconcerns dampened market sentiment, and equities fell as the US took steps towards imposing tariffs on Chinese products. Dollar strength seen during the European session was partially reversed overnight.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1443 1.1538 1.1150 3.36%
GBP/USD 1.4101 1.4220 1.3711 3.58%
EUR/USD 1.2322 1.2447 1.2154 2.35%
GBP/AUD 1.8261 1.8407 1.7599 4.39%
GBP/NZD 1.9491 1.9644 1.8904 3.77%
GBP/CAD 1.8196 1.8417 1.7584 4.52%

Today's Market Highlights

That’s most of the big-picture items out of the way for the UK now, unless there are any surprise headlines out of the second day of the EU Summit on either Brexit or trade. The EU is expected to approve a transition period.
 
Gains in US Durable Goods Orders could see some dollar strength this afternoon (12:30 GMT). Forecasts are also positive for Canadian Retail Sales and headline CPI, which could enable the loonie to pull back some lost ground against the pound. Trade war concerns will remain in focus, and markets will keep an eye on any further headlines.
 
Highlights next week include final estimates of Q4 GDP from both the US and the UK.

Today's Economic Calendar

Time Currency Release Consensus Previous
24hr EUR EU Summit
12:10 USD Fed's Bostic Speaks
12:30 USD Durable Goods Orders (Feb) 1.5% -3.7%
12:30 USD Core Durable Goods Orders (Feb) 0.5% -0.3%
12:30 GBP MPC Member Vlieghe Speaks
12:30 CAD Retail Sales MoM (Jan) 1.1% -0.8%
12:30 CAD Core Retail Sales MoM (Jan) 0.9% -1.8%
12:30 CAD CPI YoY (Feb) 2.0% 1.7%
12:30 CAD BoC CPI Core YoY (Feb) 1.4% 1.2%
14:00 USD New Home Sales MoM(Feb) 0.623M 0.593M
14:20 USD Fed's Kashkari Speaks

Caxton