Minutes from the last meeting of the Bank of England headline the economic calendar in European hours. The British Pound rose against the US dollar in Asian hours to test psychological resistance at 1.40. Overnight data saw Australian consumer confidence fall for the first time in three months while November’s New Zealand retail sales were unchanged from the preceding month.
Euro Session: What to ExpectMinutes from the last meeting of the Bank of England headline the economic calendar in European hours. Earlier this month, the Bank of England cut interest rates by 50 basis points to 1.50%, the lowest since the bank’s creation in 1694. We had noted ahead of the rate decision that the markets had ample time to price in a 0.50% cut, meaning the reduction in and of itself would not necessarily weigh on the British Pound. Indeed, sterling actually rallied on the announcement. The language revealed in tonight’s release will be far more instrumental in shaping market sentiment towards the currency going forward. Overnight index swaps now price in a 0.50% reduction both for February meeting and the next 12 months, suggesting Mervyn King and company will move to a neutral stance in the near term. A report released yesterday revealed that the Consumer Price Index fell to the lowest in 8 months in December but remained above the BOE’s 2% inflation target.
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