Pound May Find Little Direction in Bank of England Rate Decision

Talking Points:

Bank of England Rate Decision May Be a Non-Event for the British Pound
US Dollar Gains as Policy Outlook Firms After March Fed Meeting Minutes
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A monetary policy announcement from the Bank of England headlines the economic calendar in European trading hours. Governor Mark Carney and company are widely expected to keep rates unchanged. Indeed, futures markets price in no change in policy until the first quarter of next year.

This makes sense. UK economic news-flow has disappointed relative to forecasts over recent months, core inflation remains subdued and wage growth has failed to meaningfully accelerate despite the lowest unemployment rate in over six years.

The BOE does not release an explanatory statement at meetings where no policy change was undertaken. That means investors will probably have to wait for the release of minutes from the sit-down to get a glimpse at what actually transpired. This means the announcement may amount to a non-event for the British Pound.

The US Dollar narrowly outperformed in overnight trade, rising against most of its leading counterparts. The move appeared to be a mirror-image of price action in 2-year Treasury bond futures, seemingly pointing to firming front-end yield expectations as the catalyst behind strength in the greenback following the publication of minutes from the March Fed meeting earlier in the day.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

22:00

NZD

ANZ Truckometer Heavy (MoM) (MAR)

-0.4%

–

-0.4%

23:30

AUD

AiG Perf of Construction Index (MAR)

50.1

–

43.9

2:00

JPY

Tokyo Avg Office Vacancies (%) (MAR)

5.30

–

5.31

European Session

GMT

CCY

EVENT

EXP/ACT

IMPACT