The Bank of England’s rate-vote split had the pound spiking this morning and the euro was falling on the appointment of two euroskeptcis in Italy. However, both currencies are now climbing higher on worse-than-expected U.S. data.
More hawks in BoE vote
One more hawk came out to play during the Bank of England’s monetary policy committee vote Thursday.
Although it was widely expected that the MPC would hold rates steady, a 6-3 vote in favor of keeping rates at 0.5% was not expected. The bank’s Chief Economist Andy Haldane switched his vote from hold to raise, joining Ian McCafferty and Michael Saunders.
The increase in those calling for a rate hike is pound positive. The MPC’s monetary statement also pointed to improved economic measures, stating that the slowdown in the first-quarter of this year was more due to weather.
GBP/USD jumped from 1.311 to 1.321 immediately after the release. It then extended its gains to 1.323 as investors digested the statement and the U.S. released some weak data.
Later today, sterling investors will be watching for clues in BoE Governor Mark Carney’s speech.
Euroskeptics named to Italy’s economic committees
The appointment of two euoskeptics in Italy is adding to the concerns over global trade while pushing Italian stocks and bonds lower.
Alberto Bagnai was named head of the Italian Senate finance committee and Claudo Borgi was named head of the budget committee in the lower house.
The EUR/USD pair touched its lowest point in 11 months – 1.1508. The move in Italy is the latest sign that the newly formed coalition government plans to challenge parts of the European Union.
USD dips on disappointing data
The Philadelphia Fed Manufacturing Survey for June came out much lower than expected, pushing the dollar down against its major peers.
The index came in at 19.9, compared to 29.0 expected and 34.4 the previous month.
EUR/USD jumped up to 1.159 on the news and GBP/USD extended its gains to 1.323. USD/JPY reversed its climb, falling from above 110.5 to below 110.3.
Adding to the dollar’s slide, the U.S. Housing Price Index missed expectations of 0.3% increase, coming out at 0.1% month-over-month growth for April.
EUR/USD climbed higher to 1.1597 and cable pushed to 1.325.