Bank Of England Rate Decision A Likely Non-Event For British Pound

By Ilya Spivak, Currency Strategist

Talking Points
  • Bank of England Rate Decision Likely Another Non-Event for British Pound
  • Swiss CPI to Show Deeper Deflation, May Stoke EURCHF Floor Hike Bets
  • US Dollar Corrected Lower Overnight, with Aussie and NZ Dollars Leading
  • European Currencies Struggle After ECB Rate Decision, Spanish Bond Sale

The Bank ofEngland rate decision headlines the economic calendar in Europeanhours, but the announcement is likely to be anothernon-event. BOE Governor Mervyn King and company topped uptheir asset-buying efforts in February and are likely to wait untilthat increase has been fully implemented in May to consideradditional steps. The same month will conveniently mark thepublication of an updated quarterly inflation report, which willupdate the bank’s guidance on the economy and serve as thebasis for shaping policy going forward. The BOE typicallydoesn’t release a post-decision statement when no policychanges have been implemented, so this month’s outing seemslikely to offer no significant fodder for speculation and shouldthereby pass with little fanfare.

Elsewhere, Swiss CPI data is expected to show that deflationdeepened in March, with prices falling 1.1 percent from a yearearlier. This would put the pace of decline just a hair shy of therecord 1.2 percent recorded in July 2009, opening the door fortraders to build expectations of additional easing and perhaps anincrease in the EURCHF floor from its current 1.20 level. The MarchSNB FX Reserves reading may prove telling on that front, with astrong pick-up hinting that policymakers are stepping up efforts tobeat back the Franc .

The US Dollar (ticker: USDollar ) pulled back overnight after two days ofaggressive gains, sliding as much as much as 0.2 percent againstits leading counterparts. The Australian and NewZealand Dollars outperformed having suffered some of thelargest losses against the greenback since the start of theweek. Europeancurrencies were not able to meaningfully capitalize asmarkets remained unnerved by ECB President Mario Draghi’swarnings of downside risks to Eurozone growth followingyesterday’s rate decision and a disappointing Spanish bondauction that rekindled sovereign risk fears.

Asia Session : What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

2:00

JPY

Tokyo Avg Office Vacancies (%) (MAR)

9.04

-

9.15

2:30

CNY

China HSBC Services PMI (MAR)

53.3

-

53.9

E uro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

7:00

CHF

Foreign Currency Reserves (MAR)

-

224.9B

Medium

7:15

CHF

CPI (MoM) (MAR)

0.4%

0.3%

Medium

7:15

CHF

CPI (YoY) (MAR)

-1.1%

-0.9%

Medium

7:15

CHF

CPI - EU Harmonized (MoM) (MAR)

-

0.1%

Low

7:15

CHF

CPI - EU Harmonized (YoY) (MAR)

-

-1.2%

Low

8:30

GBP

Industrial Production (MoM) (FEB)

0.4%

-0.4%

Medium

8:30

GBP

Industrial Production (YoY) (FEB)

-2.1%

-3.8%

Medium

8:30

GBP

Manufacturing Production (MoM) (FEB)

0.1%

0.1%

Low

8:30

GBP

Manufacturing Production (YoY) (FEB)

0.1%

0.3%

Low

10:00

EUR

German Industrial Production (MoM) (FEB)

-0.5%

1.6%

Medium

10:00

EUR

German Industrial Production (YoY) (FEB)

0.3%

1.8%

Medium

11:00

GBP

BOE Asset Purchase Target

325B

325B

High

11:00

GBP

Bank of England Rate Decision

0.50%

0.50%

High

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.3087

1.3219

GBPUSD

1.5843

1.5928

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya , e-mail ispivak@dailyfx.com . Follow Ilya on Twitter at @IlyaSpivak

To be added to Ilya 's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2012/04/05/Bank_of_England_Rate_Decision_a_Likely_Non-Event_for_British_Pound.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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