The Bank of England hiked interest rates in a widely expected move, raising the rates by 25 basis points. The BOE Governor advised that rate hikes will be gradual. Yesterday’s rate hike was the first in a decade. The dovish forward guidance saw the British pound weakening strongly. GBPUSD fell 1.4% on the day while the EURGBP rose 1.8%. It was one of the strongest declines in the British pound in a year.
In the US President Trump officially nominated Fed member, Jerome Powell to be the next central bank chair. Powell was one of the main contenders for the post. However, markets view Powell as a cautious dove, but he is expected to continue to push ahead with the current monetary policy course.
Looking ahead the October payrolls report will be coming out today. According to the economists polled, the US economy is seen adding +300k jobs as normalcy returns. Revisions to September’s payrolls data could also be weighing on investors as data showed a decline in jobs during the September month. The average hourly earnings are expected to rise 0.2% while the US unemployment is expected to remain steady at 4.2%.
