Pound Rallies as Hawks Circle at the Bank of England
The Bank of England delivers a surprisingly hawkish statement. In the biggest division on interest rates in six years, the Monetary Policy Committee voted by five members to three to maintain interest rate at a record-lows of 0.25 percent.
Michael Saunders and Ian McCafferty broke ranks to join Kristin Forbes to demand an immediate hike to 0.5 percent. Ms Forbes had already said in the last two meetings said that she believed rates should already be higher that where they are. It all comes as inflation continues to rise, but the headache for the central bank is that wages data is weak as too is the growth picture in the UK.
Earlier today the UK also produced weak retail sales numbers for May, for the second time in three months as that inflation eats into consumers' purchasing power, adding to the quandary for the BoE.
Meanwhile Bitcoin has suffered further declines, it's now down 25 percent from the recent highs to today's lows. With many technical indicators pointing down, including the likes of the stochastics indicator, MACD and RSI, it would appear that the bears are sensing blood, but there are some bug support levels just below where trade is at the moment.
Elsewhere Greece, which continues to be a concern for the EU because of the massive debts the country owes to several parties, is attending a Eurogroup meeting in Brussels today. It's seeking to reach a deal on ways to ease its debt burden in order to unlock the next slice of aid the country needs to allow it repay about 7 billion euros in maturing bonds in July.
Looking ahead... the dearth of data continues to make itself felt with a thin diary for Friday, although the trade of the day could circle the Yen with the Bank of Japan on its decision on rates, or rather more importantly on what it says it will do to continue to support the Japanese economy. Rates are expected to remain on hold. The trade around the Dollar could be on offer with the release of the US housing starts and building permits and the Michigan consumer confidence number.
Lastly, the Baker Hughes rig count will give a further indication of the growth of the US shale business. Last week this rig count rose for the 21st consecutive week.
--- Written by Jeremy Naylor, DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.