Thursday July 19, 2018 - 13:54:36 GMT
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Doubts Starting to Surface About An August 2 Bank Of England Rate Hike
John M. Bland, MBA, co-founder, Global-View.com
June U.K. Inflation Data Miss Consensus Estimates Markets were surprised on Wednesday after the June CPI data fell short of street estimates. The month on month CPI was uchanged at 0.0% vs. estimates for a gain of 0.20% and the yr/yr reading was 2.40% vs. 2.60% estimated. Core CPI was 1.90% vs 2.10%. Headline CPI remained above its target, but well below the six year high of 3.10% set in November. Following the release, street probabilities for an August 2 rate hike fell to 74% vs. 83%. Some also are taking note of the recent declines in crude oil prices will start to flow into CPI data in coming months. The Bank of England will have to consider if it wants to tighten monetary policy just as headline inflation numbers are starting to decline. Furthermore, on Thursday, June Retail Sales data missed street estimates.
Bank of England Governor Carey Recent Apparent Rate Hike Signal being Called into question Just a couple of weeks ago Governor Carey indicated that a tighter U.K. monetary policy would be needed. He indicated that recent data had given give him confidence that the soft U.K. economy in 1Q18 was largely due to weather. His comments were interpreted to s a signal that the BOE was planning to raise rates at the next Monetary Policy Committee meeting on August 2. He said he expected the BOE would have enough information by that meeting to make its August decision. As suggested above, the most recent U.K. inflation and Retail Sales reports COULD cause the central bank to become a bit more cautious about an imminent rate hike. They might decide to watch for a little while longer before pulling the trigger on a rate hike, unless their internal data suggest that inflationary pressures are likely to mount. They will not see more CPI data before this decision.
Brexit Headlines Continue To Bedevil GBP Traders GBP traders against the majors report to us that they are only as good as the latest headline, and that the next headline can appear at any time. Key on Tuesday was a vote that the government had survived an attempt by pro-EU Conservative MPs to change its post-Brexit trade strategy. The MPs had wanted the U.K. to join a customs union if it does not agree a free-trade deal with the EU. The government, says a customs union would stop it striking new trade deals, won by 307 to 301. Nevertheless, the future for PM May continues to look precarious.
GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium
Mon 23 July 2018
A 14:00 US- Existing Homes Sales
Tue 24 July 2018
Wed 25 July 2018
A 14:00 US- New Homes Sales
A 14:30 US- EIA Crude
Thu 26 July 2018
AA 11:45 EZ- European Central Bank Decision
A 12:30 US- Weekly Jobless
A 12:30 US- Durable Goods
Fri 27 May 2018
AA 12:30 US- GDP
A 14:00 US- Final University of Michigan
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