BOE warns of problems but Sterling bounces on static base rate

Today's Highlights

• BOE warns of problems but Sterling bounces on static base rate

• Chinese data boosts AUD, CAD, NZD and others

• US industrial production awaited

FX Market Overview

Thursday's highlight was, perversely, the fact that nothing happened - as far as the Bank of England was concerned. The BOE left their base rate on hold with a unanimous 9-0 vote in the Monetary Policy Committee. They reiterated their view that the next interest rate movement would be a rise but warned of the risks to the economy of an EU exit vote and warned of softer growth data in the latter part of the year. Nonetheless, the Pound recovered against the Euro but held its own against the likes of the Aussie, Canadian, New Zealand and US Dollars.

In fact, in the Aussie and Canadian Dollars, the Pound has dropped to a very significant technical support level and may well mount a short term recovery – although the size of the bounce is a big unknown.

We heard this morning that Chinese retail sales increased 10.5% in the year to March and that Chinese industrial production for February up by 6.8% on the year. The economic growth for the 1st quarter of the year was at 6.7%. All of these figures were in line with or slightly better than expectations, so the Yuan benefited and the currencies of China's supplier nations also improved along with commodity exporters as well. That includes the Australasian Dollars and the Canadian Dollar and South African Rand.

The day ahead brings the Eurozone trade balance which is expected to show a small improvement. That would be positive for the Euro and a pain for anyone trying to buy Euros. After yesterday’s bounce in the GBP-EUR rate, this morning might be your best short term opportunity. Contact your Halo Financial Consultant for more information.

This afternoon brings the Empire State manufacturing index from America; as well as industrial production and the University of Michigan consumer sentiment index. These are all closely followed by the Federal Reserve. So, at a time when there is a lot of uncertainty over the Fed's stance on interest rate hikes and the timing thereof, this all has the potential to cause end-of-week volatility. The Sterling – US Dollar rate is at the lower end of a small upward trend channel. So there is scope for higher levels if this data misses the mark.

And then we have a weekend. Yay! Mind you, the world is about to end...again. Dutch stargazer, Frank Hoogerbeets, apparently predicted the earthquakes that struck Japan over the last couple of days and has predicted much worse disasters to come. So maybe it is worth getting your weekend activity over on Saturday to avoid the apocalypse to come.

If we are all still here on Monday, let's catch up then. Have a good one.