British Pound Vulnerable If BoE Remains Directionless
Consumer prices are already above the central bank’s 3.4% threshold and may continue to accelerate if producers continue to try and pass through rising costs. Slight improvements in manufacturing -the highest level since 1994, construction and mortgage approvals showed that the U.K. recovery is sustaining. However, the mild improvements and an unexpected decline in the service sector PMI reading to 55.3 from 56.5 could be a sign that growth has started to slow. A non-eventful BoE rate decision would shift focus to the MPC’s quarterly inflation report, as it may provide the first statements from Governor King since the date for elections was set, as the central bank doesn’t customarily release a statement if no action is taken at their policy meeting.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.