‘Super Thursday` sees the BoE unexpectedly vote 8-1 in favour of keeping rates on hold to weigh on GBP
Today, focus fell on the BoE’s `Super Thursday`, with the majority of the price action in FX markets seen in GBP after the BoE announced an 8-1 vote in favour of keeping interest rates on hold. GBP saw an immediate bout of weakness to end the European session around 100 pips lower against the USD, which came as many market participants were anticipating a 7-2 vote, with some desks even suggesting a 6-3 vote was on the cards. McCafferty was the only MPC member to vote for a rate hike, with the likes of Weale, Miles and Forbes all voting to keep rates on hold. Of note, the BoE's Quarterly Inflation Report showed an increase in GDP forecast, while inflation was forecast at 2.03% in 2 years and 2.14% in 3 years, with the BoE stating the fall in energy price drop will weigh on CPI until the middle of 2016.
Away from GBP, the most notable separate move came as AUD saw volatility during Asia-Pacific hours after a mixed Australian jobs reports, where AUD initially surged higher amid a significant beat in employment change (M/M 38.5K vs. Exp. 10.0K Prev. 7.3K, Rev. 7.0K ). However, AUD/USD fell below preannouncement levels as the unemployment rate rose to a 7-month high (M/M 6.3% vs. Exp. 6.1% Prev. 6.0%, Rev. 6.1%).
Looking ahead, tomorrow’s highlight will be Nonfarm Payrolls out of the US, with particular focus on this month’s employment data due to the data dependency of the Fed, and recent hawkish comments from Lockhart. Elsewhere, tomorrow sees the BoJ rate decision, RBA statement on monetary policy and German Industrial production.