The latest Bank of England MPC interest rate decision and Minutes are released today at 11.00 GMT
Decision wise it will be the usual non-event so once again we will be looking at the vote and Minutes that will be published at the same time.
We can expect some decent conversation to be had over the on-going Brexit hype/reality but on the flip-side they will no doubt be encouraged by the latest UK inflation data that saw better than expected headlines and core. How much was seasonal given the early Easter period is the key thing and we should expect the MPC to remain cautious until we see the next set of inflation figures.
The Minutes noted that:
"Returning inflation to the 2% target requires balancing the drag from external factors against increases in domestic cost growth. Fully offsetting that drag over the short run would, in the MPC's judgement, involve too rapid an acceleration in domestic costs, one that would risk being unsustainable and would lead to undesirable volatility in output and employment. Given these considerations, the MPC intends to set monetary policy to ensure that growth is sufficient to return inflation to the target in around two years and keep it there in the absence of further shocks."
The last vote was again 9-0 and I don't see any change to that today while the Minutes highlighted the Brexit concerns:
"There appears to be increased uncertainty surrounding the forthcoming referendum on UK membership of the European Union. That uncertainty is likely to have been a significant driver of the decline in sterling. It may also delay some spending decisions and depress growth of aggregate demand in the near term. Overall, however, the Committee judges the outlook for domestic activity to be little changed from the time of the FebruaryInflation Report, with GDP expected to grow at around average rates over the forecast period."
We'll be looking to see whether that "little changed" outlook remains after what has been a wobbly time to say the least. Overall the Minutes were less dovish than the market had anticipated and we saw a relief rally with cable up to 1.4400 and EURGBP down to 0.7868 in the immediate aftermath.
The key services PMI came in as expected in March but construction and manufacturing data continues to disappoint.
So, inflation data aside there's not a lot to set this session apart from the last one but the BOE will be keen to paint a positive picture still while expressing justifiable concerns on Brexit (while keeping their rate hike powder dry until at least the outcome is known.
GBPUSD has immediate support/demand into 1.4100 then larger at 1.4050 and 1.40000. Offers/res into 1.4200 and 1.4250 with strong sell interest at 1.4350 still.
EURGBP should remain contained within a 0.7900-0.8050 frame work.
Currently 1.4127 and 0.7965
