The Bank of England Minutes showed that the MPC voted unanimously to hold the benchmark interest at the record-low of 0.50%, and agreed to continue its asset purchase program as Europe’s second largest economy faces a deepening recession.
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GBPUSD – The Bank of England Minutes showed that the MPC voted unanimously to hold the benchmark interest at the record-low of 0.50%, and agreed to continue its asset purchase program as Europe’s second largest economy faces a deepening recession. The central bank said that ‘the initial effects of the committee’s asset purchase program had been encouraging,’ while policymakers remained uncertain about the spillover effects that could possibly undermine the outlook for long-term stability. The BoE said that ‘it was difficult to know if the falls in yields would persist once the 75 billion pound program of purchases was complete,’ and stated that ‘though there remained a high degree of uncertainty over the appropriate scale of asset purchases necessary to keep inflation at target in the medium term.’ Meanwhile, the central bank said that economic activity in the first quarter is falling at ‘a similar rate’ that we’ve seen at the end of last year, and continued to hold a dour outlook for price growth as they said ‘inflation still seemed likely to fall below the target by the second half of the year.’ Meanwhile, jobless claims in the U.K. rose 73.7K to 1.46 million in March, which was much lower than the 116.0K increase projected by the economist, and the rise in unemployment raised the claimant count rate to 4.5% from 4.3% in the previous month. Moreover, average earning including bonuses slipped to 0.1% during the three-months to February from a previous reading of 1.7%, while a separate report showed that unemployment, based on International Labor Organization methods, rose 177K in three months through February to 2.1 million, which is the most in 12 years. As a result, the ILO’s jobless rate increased to 6.7% from 6.5% in January, and demands for employment are likely to deteriorate further throughout the year as the economy faces its worst economic downturn in half a century. The data foreshadows a dour outlook for household consumption as workers face a weakening labor market, and as businesses continue to slash their work force in an effort to reduce costs, economic activity is likely to weaken further as private-sector spending falters. Discuss the topic and your trade ideas in the GBP/USD Forum.
EURUSD – A report by the European Union’s statistics office showed that the Euro-Zone’s budget deficit widened 1.9% to 69.3% of GDP in 2008 from a revised reading of 66.0% in the previous year as governments across the region raised spending to stimulate growth, while five of the sixteen member nations breeched the EU’s 3% deficit limit, which includes France, Spain, Greece, Malta, and Ireland. As a result, the EU forecasts the budget deficit to reach 4.0% this year and 4.4% in 2010 as the region faces a deepening recession. Discuss the topic and your trade ideas in the EUR/USD Forum.
