Bank of England - Monetary Policy

Daily Brief, Dec 19: Economic Events Outlook – BOE Monetary Policy on the Radar

Posted Thursday, December 19, 2019 by
Arslan Butt • 2 min read

Good morning, traders.

In Chicago, a member of FOMC Charles Evans spoke on Wednesday; he said that the labor market was now vibrant. According to him, the Federal Reserve has reached a point where it was pausing its policy. The economy was doing remarkably well in his view, and it was an excellent time to watch the macroeconomic data.

He added that Federal Reserve should be averaging 2% inflation and expected growth in employment with almost 100K jobs a month.

Last week Fed Chair Jerome Powell said that it would take a significant and persistent rise in inflation for the Federal Reserve to move rates higher. Following his comments, Evans said that he was personally worried that inflation was too low, and there was a need to be willing to get pass 2% inflation, importantly near the Federal Reserve target.

The GBP/USD trades near a one-week low ahead of the Bank of England policy decision later in the day. Economists are expecting no change in policy; however, traders are focused on how the BOE will react to risks postured by Britain’s fraught departure from the European Union.

Watchlist – Economic Events Outlook 

GBP –Retail Sales m/m – 09:30 GMT

The Office for National Statistics will be releasing retail sales data for the British economy. The figures show a change in the total value of inflation-adjusted sales at the retail level.

Considering a slight improvement in the UK inflation figures, we can expect an increase in retail sales as well. By the way, economists are expecting a surge of 0.3% vs. -0.1% beforehand. So it may keep GBP/USD supported today.

GBP – Monetary Policy Decision – 12:00 GMT

The Federal Reserve and the European Central Bank have already reduced rates, and now all eyes stay on the BoE. Businesses, investors, and officials have had a couple of fire-drill like approaches to Brexit.

After the traders absorbed the FOMC announcement and Powell’s press conference, its view of a December rate hike was inherently stable, as shown in the Fed funds futures.

The BOE is highly anticipated to keep the interest rates on hold at 0.75% vs. 0.75% beforehand. While the MPC official bank voting also remains steady at 0-2-7. Sterling may remain supported over the release of the news. Nevertheless, in case you see any change in voting figures as we experienced during the previous month, it will be surprising enough to shake the market up to 100 pips.

USD – Philly Fed Manufacturing Index – 13:30 GMT

The Federal Reserve Bank of Philadelphia is due to release data on manufacturing. It’s a survey of about 250 manufacturers in the Philadelphia Federal Reserve district, which asks respondents to rate the relative level of general business conditions.

Lately, the US Philly Fed Manufacturing figures have improved much, placing as high as 21.8. For now, the figures are likely to drop from 10.4 vs. 8.1. It may put bearish pressure on the US dollar today.

That’s it for now, stay tuned to FX Leaders for quick trade plans and forex trading signals. Good luck!

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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