It’s Super Thursday in the UK: the Bank of England held its policy meeting and some major reports were released. Brexit is the word of the day: while there are a few other reasons to be disappointed about the UK economy at the moment, such as the government’s fiscal consolidation and the National Living Wage, it’s Brexit that is casting the biggest pall. A slowdown in China and a lackluster Eurozone are also contributing to the general malaise. No surprise, then, that the central bank voted unanimously for the 86th time to hold rates at 0.5%, and forecasted that growth would pick up if there were a “Remain” vote come June 23rd.
The BoE warned in its quarterly Inflation Report that a “Leave” vote “could lead to a materially lower path for growth… The sterling is also likely to depreciate further, perhaps sharply.”
Oil is nearing a six-month high, coming in at $46.66 early this morning, above its threshold level of 45, driven upward by reports from the International Energy Agency that there will be a smaller global glut than previously thought.
Graph from Bloomberg
US output is also falling, contributing to the increase in price. Crude has come a long way from the low of $26.05 a barrel just a couple months ago in February.
EURUSD: Euro down on lack of upward economic movement.
GBPUSD: The pound has advanced with BoE decision to leave rates unchanged.
AUDUSD: Aussie dollar slumped as much as 0.8% over interest rate speculation.
USDCAD: Canadian dollar retains its slight lows.