Yesterday the Bank Of England monetary policy committee voted unanimously (9-0) to hold interest rates at record lows of 0.25% and to continue with quantitative easing. Governor Mark Carney told a news conference that growth had remained resilient since the referendum, and revealed that the bank is predicting 2% growth this year. He cautioned about potential challenges ahead as the UK starts the formal process of leaving the EU, and emphasised that interest rates could still move in either direction as the Bank will respond accordingly. “The stronger projection doesn’t mean the referendum is without consequence,” Carney said.
In the morning, figures showed that the UK construction sector lost momentum in January, with overall business activity growing at the lowest pace since the post-Brexit referendum recovery began, while the rate of cost inflation was the highest on record in seven years. The Markit/CIPS UK Construction Purchasing Managers' Index stood at 52.2 for last month, compared with analysts' expectations for a 53.8 figure and with the 54.2 reading recorded in December, which had been the fastest pace in nine months.
In a speech yesterday, European Central Bank President Mario Draghi said that abolishing the EUR would not benefit any country in the currency bloc, and governments mostly have themselves to blame for their economic problems. Euroscepticism has gained ground in the Eurozone as the political landscape has become more populist, and Draghi said that the root cause of Europe's economic problems was political. He was quoted as saying : "Countries that have implemented reforms do not depend on a flexible exchange rate to achieve sustainable growth. If a country has low productivity growth because of deep-rooted structural problems, the exchange rate cannot be the answer."
09:30 – GBP : Services PMI, expected at 55.8 against a previous of 56.2
13:30 – USD : Non-Farm Employment Change, expected at 170K against a previous of 156K
13:30 – USD : Unemployment Rate, expected to remain at 4.7%
15:00 – USD : ISM Non-Manufacturing PMI, expected at 57.00 against a previous 57.2