Daily Market Report 17/06/16

GBP

Yesterday the bank of England  unsurprisingly voted 0-0-9 to keep interest rates unchanged at a record low of 0.5% they could not avoid wading into the Brexit.

Warning that uncertainty about the EU referendum is the "largest immediate risk" facing global financial markets; the Bank said there were "risks of adverse spill-overs to the global economy" and stating that it was "increasingly likely" that sterling would fall further in the event of a leave vote.

MPC members said there was growing evidence that UK businesses and consumers were putting off "major economic decisions" ahead of the referendum, with real estate and car purchases delayed, along with business investments. The BoE also said it had contingency measures in place to deal with any fall-out from the referendum result, including more support to banks and partnerships with other central banks to maintain financial stability. A vote to leave would also mean that interest rates would probably stay on hold for some time where a remain vote would once again open the door for a rate hike in 2017.

However, support for leaving the European Union has surged, according to two telephone opinion surveys, with one pollster putting support for "Leave" at a more than three-year high. The Ipsos MORI poll of 1,257 adults across Britain from June 11-14 showed 51 percent of all voters wanted to leave the bloc and 49 percent wanted to stay.

A separate phone poll by Survation showed 'Leave' ahead on 45 percent, up 7 percentage points from its last poll on May 25 and ahead for the first time since the poll began in February. Support for "Remain" dipped 2 percentage points to 42 percent with 13 percent undecided. The poll surveyed 1,104 people.

British retail sales growth unexpectedly picked up speed in May after a bumper performance in April, boosted by a big increase in clothing sales. Retail sales volumes rose 6.0 percent in May, the biggest annual rise since September. Much of May's strength was a result of  a rebound in clothing sales, which had performed rather weakly in April when colder than normal weather dampened demand.

USD

U.S. consumer prices moderated in May, but sustained increases in housing and health care costs kept underlying inflation supported, which could allow the Federal Reserve to raise interest rates this year. The Labour Department said on Thursday its Consumer Price Index Increased 0.2 percent last month after rising 0.4 percent in April. In the 12 months through May, the CPI advanced 1.0 percent after rising 1.1 percent in April. Last month, gasoline prices rose 2.3 percent after surging 8.1 percent in April. Food prices fell 0.2 percent, reversing the prior month's increase.

Initial claims for state unemployment benefits increased 13,000 to 277,000 for the week ended June 11 slightly higher than forecast. Claims have now been below 300,000, a threshold associated with a strong job market, for 67 straight weeks, the longest streak since 1973.
 

Key Announcements

13:00 – GBP: Reuters/ Michigan Consumer Sentiment index (Jun)

16:00 – EUR: ECB President Mario Draghi Speaks