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19 Mar 2014
Flash: Day ahead, BoE and UK labour mkt- Rabobank
FXStreet (Guatemala) - Strategists at Rabobank explained that today’s first focus is the BoE minutes and UK labour market report.
Key Quotes:
“Expectations are for unemployment claims to have dropped 25K, similar to last month. That would see the 3M/3M ILO unemployment rate stay at 7.2%, but with the BoE already suggesting that it is no longer looking at unemployment as a real ‘line in the sand’ on the rates front (which the minutes should underline), the market impact may be muted unless we get a significantly stronger-than-expected number”.
“Following that the market will turn to the UK budget, where Chancellor George Osborne gets to carry out the financial equivalent of a rain-making ceremony, as he waves around a battered red leather briefcase in the hope that GDP growth, tax revenue, and the Conservative vote share all increase ahead. Given it is a pre-election budget, and that the UK is enjoying a retro pre-election housing boom, we can no doubt expect much talk about the need to press ahead with painful austerity while simultaneously introducing a juicy tax break somewhere to keep the voters happy”.
“Meanwhile, BoE Governor Carney has separately announced plans to fuse BoE departments and integrate financial stability with monetary policy to try to prevent future crises; that structural shift is welcome but sits somewhat uneasily with the fact that a furious housing boom is taking place in London and the Southeast that the Bank seems remarkably sanguine about”.
Key Quotes:
“Expectations are for unemployment claims to have dropped 25K, similar to last month. That would see the 3M/3M ILO unemployment rate stay at 7.2%, but with the BoE already suggesting that it is no longer looking at unemployment as a real ‘line in the sand’ on the rates front (which the minutes should underline), the market impact may be muted unless we get a significantly stronger-than-expected number”.
“Following that the market will turn to the UK budget, where Chancellor George Osborne gets to carry out the financial equivalent of a rain-making ceremony, as he waves around a battered red leather briefcase in the hope that GDP growth, tax revenue, and the Conservative vote share all increase ahead. Given it is a pre-election budget, and that the UK is enjoying a retro pre-election housing boom, we can no doubt expect much talk about the need to press ahead with painful austerity while simultaneously introducing a juicy tax break somewhere to keep the voters happy”.
“Meanwhile, BoE Governor Carney has separately announced plans to fuse BoE departments and integrate financial stability with monetary policy to try to prevent future crises; that structural shift is welcome but sits somewhat uneasily with the fact that a furious housing boom is taking place in London and the Southeast that the Bank seems remarkably sanguine about”.