Disappointment, Fragility, Jobs…Jobs…Jobs & HPI.

The MPC disappointed yesterday in not raising interest rates in a shock to financial markets. Following recent comments from MPC members, traders were expecting a rate hike.

Fed Chair Jerome Powell in the past has been labelled the ‘unreliable boyfriend’ having promised to hike rates previously, the same tag could be given to Governor Bailey, a label he attempted to dismiss in his press conference. Since yesterday’s announcement sterling has lost 1.7% of it’s value vs the dollar.

Sterling’s depreciation in the past day shows its fragility. The BOE was looking to increase interest rates to curb inflation that’s being driven external factors such as the cost of raw materials, rather than excess demand. It’s an unusual position with consumer confidence low due to soring energy costs and wages being squeezed by increased living costs.

Attention now turns to the non-farm payrolls out of the US, the consensus forecast is for 445k new jobs created. If this number is exceeded, we’ll likely see further losses on GBPUSD which is already trading at 11-month lows.

House prices in the UK continue to soar, Halifax have this morning reported an 8.1% increase in the year to October. The housing market is expected to cool following many Highstreet banks pulling their best mortgage offers, driving costs up. Wales out stripped the rest of the nation with a 12.9% appreciation.

 

 

Economic Calendar

Expected Previous
06:00 EUR Retail Sales (M/M) 0.2% 0.3%
08:15 MPC Member Ramsden Speaks
08:30 Non-Farm Employment Change 455K 194K
08:30 USD Unemployment Rate 4.7% 4.8%
09:00 MPC Member Tenreyro Speaks
15:00 USD Consumer Credit (M/M) 16.1B 14.4B

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.