GBP
The only notable announcement
concerning the pound yesterday was the Bank of England MPC vote, with a
unanimous decision to keep interest rates unchanged at 0.5%, which sat in line
with expectations. The Bank of England however did identify that two unidentified
members on the committee stated that their decision was finely balanced between
pushing for a rate hike and keeping rates on hold. Hopes of interest rate

GBP
The only notable announcement
concerning the pound yesterday was the Bank of England MPC vote, with a
unanimous decision to keep interest rates unchanged at 0.5%, which sat in line
with expectations. The Bank of England however did identify that two unidentified
members on the committee stated that their decision was finely balanced between
pushing for a rate hike and keeping rates on hold. Hopes of interest rate
hikes this year were all but eliminated by Mark Carney, outlining lack of
growth and low inflation as the main obstacles.

The BoE Agents summary of business conditions show consumer services and retail
sales turnover has increased marginally, whilst the housing market remains
below last year, which further outlines the ongoing issue with housing in the
UK. In a debate surrounding Britain’s place in the EU, the head of the
Confederation of British Industry has said that the UK would face isolation if
it quit the EU and has urged other business leaders to speak up about the
benefits of the EU for Britain. 

EUR
The ECB non-monetary policy meeting began
yesterday, with the situation with Greece being the main topic. Greek Finance
Minister Varoufakis stated that a deal between the country and its lenders is
targeted for the 5th of June. However, talks appeared to be souring after
Varoufakis suggested that his German counterpart Shaueble has flawed reasoning
regarding Greece. Sources suggest that the Greek government have suggested to
the EU and the IMF the idea of putting in place a banking transactions tax,
proposing a levy of 0.1-0.2% with the aim of raising an additional
300-600million euros each year. There were also reports that the Greek Central
Bank are to ask for EUR1.1bln increase however this has yet to be confirmed,
rumours are that the ECB have only approved an increase to their
Emergency Liquidity Assistance (ELA) ceiling by EUR200mln.. The activity
surrounding Greece did cause the EUR to remain under pressure throughout
yesterdays session. 

USD
Federal Reserve member Charles
Evans stated yesterday that a rate hike for the US will not be appropriate
until early 2016. Evans, who has long argued for a delay to rate hikes so as
not to undermine economic recovery, as the US central bank should not move
rates until there was greater confidence that its inflation goal could be hit
within one or two years. This is conflicting with the recent meeting where Fed
chair Janet Yellen stated that she believes that an interest rate hike will be
appropriate at some time this year. FOMC minutes released last night were also
conflicting with earlier statements from Yellen, with only a few FOMC members
supporting the interest rate hike in June, however they in general did not
exclude the possibility of such a move. 

Key Announcements

08:00 – EUR – French Manufacturing flash PMI
08:30 – EUR – German Manufacturing flash PMI
09:30 – GBP – Retail Sales
11:30 – EUR – ECB Monetary Policy Meeting Accounts
13:30 – USD – Unemployment claims
15:00 – USD – Existing home sales 
15:00 – USD – Philly Fed Manufacturing Index
17:30 – EUR – ECB President Draghi’s speech

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