The British Pound Unlikely to Find Fuel in Bank of England Rate Decision

A monetary policy announcement from the Bank of England headlines the economic calendar in European trading hours. While UK economic news-flow has cautiously improved since December’s sit-down, the outlook is not so robust as to expect the hawks to build the voting majority needed to produce a hike. Indeed, futures pricing implies the first increase in the benchmark lending rate will not arrive until the fourth quarter. The BOE typically doesn’t publish a statement when policy is left unchanged, so today’s announcement will probably amount to a non-event for the British Pound.

The safety-linked Japanese Yen slumped while the sentiment-geared Australian and New Zealand Dollars staged an impressive advance in overnight trade as risk appetite firmed. The MSCI Asia Pacific regional benchmark stock index rose 1.2 percent. The move appeared to follow on from a recovery on Wall Street, where the S&P 500 snapped a losing streak to produce the largest advance in three weeks. The move higher appeared corrective following five days consecutive down days rather than inspired by minutes from December’s FOMC meeting or an upbeat set of economic data outcomes, as the newswires suggested.

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