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FCP Daily Market Update

20 April 2018

The pound is down this morning after the BoE Governor Mark Carney hinted that market expectations of a May rate rise were overblown. Recent surveys suggested a 90% chance of a rate hike from 0.5% to 0.75% at the next meeting on May 10th. However, Carney told the BBC last night that the MPC were not fixed on a particular month for raising rates and pointed to some softer UK data to back this up.

To highlight this, the three important UK macroeconomic indicators came in below expectations this week. The latest disappointment saw retail sales fall-1.2% m/m in March knocking some 0.03 percentage points off of Q1 GDP growth.

Elsewhere, the Eurozone current account recorded a surplus of €35.1 billion in February, down from €37.6 billion in January.  In the US, the initial jobless claims reached 232K in the week ending April 13th while the Philadelphia manufacturing survey unexpectedly accelerated to 23.2 in April. Cleveland Fed President Mester stated if the economy evolves as anticipated, he believes further rate hikes will be appropriate this year.

Ahead today, BoE MPC member Saunders is scheduled to talk at 09:30GMT.  He voted for a rate hike in March so his comments will be closely monitored especially in light of Carney’s comments yesterday.  German PPI is expected to increase 0.2% m/m in March while rising 2.05 y/y. In the US, Chicago Fed President is due to speak about current economic conditions while there is further Fed chat later with San Francisco President Williams talking at an event at 15:15 GMT. 

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