Markit said the UK’s service sector is expected to expand by 0.6 percent in the first quarter of 2016, picking up a bit of speed from estimated growth of 0.5 percent in the last three months of last year. On the back of this data we saw GBP strength against both the EUR and USD.
To compound USD weakness New York Fed president William Dudley said yesterday that the weakening of the economy means conditions have tightened since the Fed raised rates. If current concerns are still in place at the time of its March meeting the Fed would have to take that into consideration to decide if it will raise rates again. He also cited that any further strengthening of the USD could have serious consequences for the health of the US economy.
On a slightly more positive note for the US economy the ADP employment change beat forecasts as US employment increased by 205,000 in January compared to forecasts of a 195,000 rise. This could imply we see a positive figure for the non-farm payrolls on Friday.
12:00 – GBP – BoE Interest Rate decision expected to remain unchanged at 0.5%
12:00 – GBP – Monetary Policy Summary
12:00 – GBP – Bank of England Inflation Report
12:00 – GBP – Bank of England Minutes
12:45 – GBP - BoE’s Governor Carney Speech
13:30 – USD – Initial Jobless Claims expected to rise to 280k from 278k