As expected, the UK MPC did not change policy in its May meeting, keeping the size of its asset purchase programme at £375bn and Bank Rate unchanged at 0.5%. With the Funding for Lending Scheme just extended in April and a recent run of upbeat UK economic data, the Bank of England seem comfortable waiting to see whether the improvement is sustained.
The UK economy continued to surprise on the upside yesterday with the cold weather providing a boost to the energy sector. Industrial production rose by 0.7% in March considerably better than the consensus forecast of 0.2%. Manufacturing output was also surprisingly strong, growing 1.1% on the month (consensus 0.3%) with the detail revealing a broad based increase in activity. And as we know when data is better than expected it is good news for the currency.
Meanwhile, in the US jobless claims (wk 4 May) fell 4k to 323k, a post-recession 5 year low. After the flow of US economic data released in April tended to underperform expectations, the more recent trend of reports released has shown more upside surprises.
Despite this news US dollar has been boosted by growing speculation that the Fed will taper QE bond buying sooner if conditions in the labour market continue to improve. USD/JPY broke through the 100 Yen mark for the first time since April 2009. US dollar gains were widespread with GBP/USD falling 1.5 cents to below $1.5425 while EUR/USD is trading close to $1.30 early this morning.
Posted in Daily Market News on May 30 2014
The minutes of the April MPC meeting showed the voting pattern unchanged at 6-3 to keep quantitative easing unchanged. The same three members, including the governor, were out-voted on their call for an additional £25bn of gilt purchases.VIEW FULL ARTICLE
Posted in Daily Market News on May 9 2013 by alex