GBP

The Bank of England unanimously voted to keep the benchmark
interest rate at 0.5% and the quantitative easing programme at £375bn in its
latest minute’s yesterday morning. Policy makers did however comment that even
if the unemployment rate falls to the 7% threshold, the BoE may still need to
keep the benchmark rate at 0.5%, in order to ensure the recovery was
sustainable.

GBP

The Bank of England unanimously voted to keep the benchmark
interest rate at 0.5% and the quantitative easing programme at £375bn in its
latest minute’s yesterday morning. Policy makers did however comment that even
if the unemployment rate falls to the 7% threshold, the BoE may still need to
keep the benchmark rate at 0.5%, in order to ensure the recovery was
sustainable.

The pound dropped immediately following the announcement but
soon recovered as investors realised that the comments weren’t too dissimilar
from previous ones with regards to an interest rate hike.

EUR

In a week that looked so promising for the euro with
positive data expected throughout the week; fortunes for the euro has somewhat
changed. According to sources the ECB are considering a negative rate of
interest in order encourage banks to lend to one another and thus stimulate the
economy.

The euro weakened by 1% against the pound and the US dollar
and as long as data continues to disappoint in the Eurozone, then we could well
the euro weaken further.

USD

The US experienced mixed data yesterday afternoon. The rate
of inflation fell in line with forecasts to 1% but retail sales beat forecasts
rising to 0.4% in October from 0% in September.

The main event however was the release of the minutes from
the Federal Reserve’s latest monetary policy meeting. The outcome was a bit of
a surprise with policy makers announcing that tapering of its US$85bn monthly
bond buying programme may occur in the coming months – as long as the economy
continues to improve as anticipated. This would mean that tapering could occur
earlier that recent forecasts of March 2014.

The US dollar strengthened off the back of the news to the
tune of 0.3% against the pound and 0.37% against the euro.

Today

Data from the Eurozone has disappointed with both the manufacturing
and service sectors falling shy of expectations and showing that growth slowed
in November. Mario Draghi is due to speak this morning and no doubt will be
questioned on the possibility of negative interest rates.

UK data this morning has showed that the deficit for the UK’s
public sector borrowing costs haven’t reduced as much as expected, with the
deficit only falling to £6.383bn instead of £4.000bn. The pound has weakened
off as a result.

Given the outcome of last nights Fed meeting, movements on
the US dollar will be even more sensitive to economic data. Today job data is
set to reveal that the number of people filing for jobless claims fell for the
week ending 15^th November, adding to signs that the US job market is
improving. Mixed data is expected with regards to manufacturing with data
agency Markit revising an expansion of the sector whilst the Fed Bank of
Philadelphia forecasting a lower print for November.

Key Announcements:

10.05am – EUR – ECB President Draghi’s Speech.

13.30pm – USD – Initial Jobless Claims (Nov 15): Expected to
fall to 335,000.

13.58pm – USD – Markit Manufacturing PMI (Nov): Expected to
increase to 52.4.

14.30pm – EUR – Consumer Confidence (Nov): Expected to
improve to -14.

15.00pm – USD – Philadelphia Fed Manufacturing Survey (Nov):
Expected to fall to 15.5.