Sterling stays firm against Euro with EUR/GBP pressing 0.7226 near term support as markets await BoE rate decision. The BOE would most likely leave its monetary policy unchanged, with the Bank rate at 0.50% and asset purchases at 375B pound. As such, there would be no statement and voting result (we expect 9-0 vote) released until a few weeks later. In the February minutes, policymakers warned of pound's strength, suggesting that ECB's extended QE and UK's stronger growth outlook, when compared with the Eurozone, might lead the pound to go further higher. We believe exchange rate would remain the focus of the discussion. But for today, mostly only a brief statement will be released and market reactions could be muted.
The FOMC minutes for the March meeting revealed policymakers were split in the timing of rate hike. As mentioned in the minutes, 'several' members were anticipating raising rates in June, while a 'couple' preferred to wait until 2016. On economic developments, the central bank attributed the weaker than expected growth in 1Q15 to transitory factors, including adverse weather and the West Coast port strike. They also cited factors such as lower energy sector activity and reduced state and local government revenues in places where energy sector activity plays an important role. The members revised down the medium-term growth outlook, with stronger dollar the key factor. Despite the downward revision, the FOMC judged that the progress made, particularly in lowering unemployment, should warrant the removal of forward policy rate guidance indicating that 'the Committee would be patient in beginning to normalize the stance of monetary policy'.
On the data front, Germany will release industrial production and trade balance. UK will release tarde balance. Canada will release building permits and new housing price index. Meanwhile, US will release jobless claims and wholesale inventories.