Fed hold rates ahead of BoE
3 November, 2016
Yesterday the pound made some good gains as construction PMI posted a better than forecast figure coming in at 52.6 rather than the expected 51.8, showing the sector grew faster than expected.
The pound was boosted by half a euro cent and nearly a whole US dollar as the news filtered through early doors, right through to the open of the US markets. The gains against the dollar were helped by the “Trump effect”, as the US currency and stock markets reacted badly to the news he is edging ahead in the early polls.
There was little else to go on the rest of the day as markets awaited for the Fed interest rate decision and policy statement, which as expected came out unchanged. Only two members voted for an interest rate hike, opposed to the three who voted last month, but they still say the case for a rate hike “continues to strengthen ” although one would expect they await the vote for the new President before making any such decisions and if anything is going to happen, it will be December if at all. Some forecasters are predicting a significant drop in the dollar value if Trump gets the vote so anyone with a requirement might be wise to secure the deal before the 8th November. Contact one of the CI team to discuss the available options.
Today we have Markit services PMI this morning followed by the Bank of England policy results, statement, minutes and quarterly inflation report all at midday. Will we have a rate cut or see a change to the current QE program and how will the inflation report affect the pound? Mark Carney rounds it off at 12.30pm with a speech which will no doubt lead to some market volatility so once again, it might be prudent to secure your currency this morning rather than risking it over the BoE or the US Markit services PMI which comes out an hour later ahead of the volatile non-farm payrolls employment data tomorrow.
Call one of the team today for some friendly guidance and to discuss your options.
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