16/12/16 - BoE Warn UK Slowdown Still Likely

GBP

Yesterday afternoon the Bank of England’s monetary policy committee (MPC) unanimously voted to hold interest rates at 0.25% and warned a slowdown in growth was still likely following the Brexit vote, although it added inflation will not rise as much as it had forecast.

Carney revealed in the December meeting there will be "limits" to the extent the Bank of England will tolerate inflation above its target of two per cent and said he could respond "in either direction" to changes to economic outlook.

The BoE has previously warned the UK was likely to see "little growth in GDP in the second half of the year" as the economy ground to a halt following the Brexit vote which was reiterated today, saying it sees GDP growth of 0.4 per cent in the fourth quarter

USD

The Dollar strengthened again during the session after US consumer prices moderated in November, but the underlying trend continued to point to firming inflation pressures amid rising rents, which could support more interest rate increases from the Federal Reserve next year.
 
The prospects of further monetary policy tightening in 2017 were also boosted by other data on Thursday showing a decline in the number of Americans filing for unemployment benefits as many view the labour market as being close to full capacity.
 
On Wednesday evening the Fed forecast three rate hikes in 2017 in anticipation of U.S. President-elect Donald Trump's expansionary fiscal policy agenda aimed at boosting growth through infrastructure spending and tax cuts.
 

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13:30 – USD – Building Permits is forecast to decrease to 1.24M