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Pound Reaction to BOE Minutes, Jobless Claims May Prove Limited

Pound Reaction to BOE Minutes, Jobless Claims May Prove Limited

Ilya Spivak, Head Strategist, APAC

British Pound price action is likely to prove tame the Bank of England prints minutes from October’s meeting and September’s jobless claims data hits the wires.

Talking Points

  • Pound Unlikely to See Strong Reaction to BOE Minutes, UK Jobless Claims
  • Dollar May Fall as Pickup in September Housing Data Buoys Risk Appetite

Minutes from October’s Bank of England meeting are in focus in European trading hours. Traders will look for guidance on the potential for additional QE after the latest round of asset purchases runs its course next month. September’s sit-down of the rate-setting MPC committee produced a unanimous poll in favor of the status quo. A shift in the voting pattern that sees a significant number of policymakers call for an expansion of stimulus would stand to weigh on the British Pound. However, the improvement in the tone of UK economic data between the September and October meetings suggests this is unlikely.

Meanwhile, UK Jobless Claims are expected to print unchanged in September following two consecutive declines in July and August. Declines in manufacturing- and service-sector employment telegraphed in September’s PMI reports opens the door for a downside surprise. Such an outcome is unlikely to carry lasting negative implications for the Pound if the likelihood of continued standstill on the monetary policy front is reinforced as expected.

Later in the day, the spotlight returns to the US calendar, where Housing Starts and Building Permits headline the docket. Expectations point to improvements on both counts in September, which may drive a further pickup in sentiment amid hopes for improved performance in the world’s top economy and weigh on haven demand for the US Dollar.

The greenback underperformed in overnight trade, down against all of its top counterparts, as risk appetite firmed across Asian bourses and dented demand for the go-to haven currency. The MSCI Asia Pacific regional benchmark equity index added 1 percent, buoyed by an improvement in the outlook for exporters following an encouraging set of US economic data. Moody’s decision to uphold Spain’s investment-grade credit rating was likewise supportive.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

23:30

AUD

Westpac Leading Index (MoM) (AUG)

0.5%

-

0.3% (R-)

6:00

JPY

Machine Tool Orders (YoY) (SEP F)

-2.8%

-

-3.0%

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

8:30

GBP

Average Weekly Earnings 3M/YoY (AUG)

1.6%

1.5%

Low

8:30

GBP

Weekly Earnings ex Bonus 3M/YoY (AUG)

2.0%

1.9%

Low

8:30

GBP

Claimant Count Rate (SEP)

4.8%

4.8%

Medium

8:30

GBP

Jobless Claims Change (SEP)

0.0K

-15.0K

High

8:30

GBP

Employment Change (3M/3M) (AUG)

200K

236K

Medium

8:30

GBP

ILO Unemployment Rate (3M) (AUG)

8.1%

8.1%

Medium

8:30

GBP

Bank of England Minutes

-

-

High

9:30

EUR

Portugal to Sell 3-, 6- and 12-month Bills

-

-

Medium

10:00

EUR

Germany Releases Biannual Economic Forecasts

-

-

Medium

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2978

1.3137

GBPUSD

1.6070

1.6174

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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