Main Points of Today

BoE expected to remain on hold today

• BoE will announce its interest rate decision today (12:30 GMT) and is expected to remain on hold at 0.50%.
• GBP OIS imply a probability to remain on hold at around 89%, while the rest is for a 25 basis points rate hike.
• Market focus is expected to shift to the banks accompanying statement as well as the actual votes for any discerning voices.
• We see the case for the statement to have a well balanced tone however risks seem to tilt to the upside for a more hawkish tone.
• Should there be a hawkish tone ahead of a possible May rate hike, we could see the GBP strengthening.

The Fed hiked yesterday however the USD weakened

• The FOMC decided a 25 basis points rate hike yesterday and the Fed’s interest rates reached 1.75%.
• The renewed dot plot did not show the 4 rate hike path many analysts expected.
• Overall, despite the well balanced tone and the positive economic projections the absence of any hawkish elements in the accompanying statement and the press conference could have disappointed the market somewhat.
• The USD should start stabilizing and correcting after the initial expectations gap.

Today’s other economic highlights

• France: Markit Mfg Preliminary PMI for March, Survey:55.5 Prior:55.9, 08:00 GMT, could weaken the EUR
• Germany: Markit Mfg Preliminary PMI for March, Survey:59.8 Prior:60.6, 08:30 GMT, could weaken the EUR Ifo Business  Climate for March, Survey:114.8 Prior:115.4, 09:00 GMT, could weaken the EUR
  Ifo Current Conditions for March, Survey: 55.0 Prior: 55.3, 09:00 GMT, could weaken the EUR
• Eurozone: Markit Mfg Preliminary PMI for March, Survey:58.1 Prior:58.6, 09:00 GMT, could weaken the EUR
• UK: Retail Sales for February, Survey:+0.4% mom Prior:+0.1% mom, 09:30 GMT, could strengthen the GBP
• US: Initial Jobless Claims, Survey:225k Prior:226k,12:30 GMT, neutral for USD Markit Mfg Preliminary PMI for March, Survey:55.5 Prior:55.3, 13:45 GMT, neutral to negative for USD
• Speakers: ECB’s Sabine Lautenschlaeger (08:30, GMT), BoE’s Deputy Governor Dave Ramsden (17:00, GMT) and BoC’s senior Deputy Governor Carolyn A. Wilkins speak.