Bank of Japan, BoJ, raised interest rates in the early morning session by 25 basis points to a base rate of 1.25%. This was in line with expectations of what the Japan’s central bank needed to do, so no surprise for markets. What did come as a surprise was that two of members dissent and preferred rates to be held at 1%. The outlook for future guidance and upcoming potential rate hikes later in the year, is currently looking more dovish and JPY fell in the morning session by 0.8% to the USD. and respectively 0.75% to GBP.
Ahead of its policy meeting, inflation reports came out. Core inflation was expected to halt at 1.8% but did actually fall by 0.1% to 1.7%. While inflation levels stayed on par from its previous reading at 1.9%. This has also fuelled market speculations ahead of upcoming interest rates decision, if inflation levels already start to diminish, creating less argument for BoJ to raise rates. The Japanese 2-year bond yield fell after the policy meeting by 2.5 basis points.
British retail sales rebounded in August back to 0.5%, above forecasts of 0.2% decline and improvement from fall in July of -0.5%. A combination from recovery in department stores recuperating stock problems in the previous month and non-store retailers bounced back with late summer sales. Total spending across the sector rose by a total of 1.3% in the month.
GBP/EUR 1.1630 GBP/USD 1.3356 GBP/AED 4.9075
GBP/AUD 1.8749 GBP/CHF 1.1014 GBP/CAD 1.8703
GBP/NZD 2.3359 EUR/USD 1.1468 GBP/ZAR 21.7349