In the European session, we don't have anything on the agenda leading up to the BoE policy decision. The BoE is expected to keep the bank rate unchanged at 4.00% with a 7-2 vote split and slow the pace of QT to £67.5 billion from £100.0 billion currently. The market is pricing just 10 bps of easing by year-end and 42 bps by the end of 2026. The central bank is unlikely to deviate much from its prior guidance and should put more emphasis on inflation again.
In the American session, the focus will turn to the US Jobless Claims report. Initial Claims are expected at 240K vs 263K prior, while Continuing Claims are seen at 1950K vs 1939K prior. As a reminder, the last week's release showed Initial Claims jumping to a new cycle high and the highest level since 2021. Later, it turned out that the initial claims data was negatively skewed by a big spike in Texas and those filings were fraudulent. Therefore, we can expect them to be revised lower and remain in the same 4-year range with 260K as a ceiling.
The Jobless Claims report will be the first important labour market report since yesterday's Fed decision and it's going to be market-moving, especially if we get notable deviations. The Fed yesterday leant on a more hawkish side compared to market's pricing and even though they projected two more rate cuts by the end of the year, the economic data in the next weeks and months could still change that. Therefore, we remain slaves to the data.
