- Posted by currencies in Bank of England, Bremain, Brexit, Budget, Currency, Dollar, Economy, EUR, Fed, GBP, Inflation, Mark Carney, No Deal, Prime Minister, Rate Cuts, Referendum, Sterling, UK, Uncategorised
- August 2, 2019
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The Bank of England (BoE) policymakers voted unanimously to leave interest rates unchanged at 0.75%.
However, the bank slashed its growth forecasts amid the growing risk of a no-deal Brexit.
The BoE downgraded it forecasts to 1.3% growth for both 2019 and 2020 providing the UK avoids a disorderly exit from the European Union.
GBP held close to 30-month lows against the dollar this morning as a shrinking of Britain’s ruling Conservative Party’s majority in parliament added to worries over domestic politics.
Britain’s pro-European Union Liberal Democrats won a parliamentary seat from the governing Conservatives, a blow to Prime Minister Boris Johnson in his first electoral test since taking office.
The loss reduces Johnson’s working majority in parliament to just one ahead of an expected showdown with lawmakers over his plan.
Activity in Britain’s construction industry shrank for a third month in a row in July as Brexit worries hit building projects, amid concerns that the slowdown could soon spill over into other areas of the economy, a survey showed.
The IHS Markit/CIPS construction Purchasing Managers’ Index (PMI) rose to 45.3, a less severe contraction than June’s 43.1 -which was the weakest reading in more than 10 years – but still well below the 50 level at which growth begins.
Focus on the US non-farm payrolls will be key today. The data due at 12:30 GMT is expected to show the US economy added 164K jobs in July, having added 224K jobs in June.
The jobless rate is expected to remain steady at 3.7%. The average hourly earnings are expected to rise 3.2% year-on-year in July, following a 3.1% rise in June.
A weaker-than-expected labor market data coupled with heightened trade tensions will likely trigger expectations of aggressive easing by the US Federal Reserve in the next few months, possibly leading to deeper losses in the US yields and the US Dollar.