Headlines:
- BOE raises bank rate by 50 bps to 1.75%, as expected
- BOE's Bailey: UK forecast to enter recession later in the year
- Pound tumbles as BOE warns of dire economic outlook
- Saudi Arabia, UAE to save spare oil capacity in case of a supply crisis in the winter
- Germany June factory orders -0.4% vs -0.8% m/m expected
- Germany July construction PMI 43.7 vs 45.9 prior
- UK July construction PMI 48.9 vs 52.0 expected
Markets:
- AUD and NZD lead, GBP lags on the day
- European equities higher; S&P 500 futures up 0.1%
- US 10-year yields up 0.8 bps to 2.714%
- Gold up 1.1% to $1,783.38
- WTI crude up 0.4% to $90.08
- Bitcoin down 1.8% to $22,901
The BOE policy decision was the main event on the session and it did not really disappoint. Well, unless you're betting on the pound that is. The risks coming into the meeting was skewed to the downside and with the BOE warning of the longest recession since the global financial crisis and also providing a subtle shift in guidance à la the RBA i.e. "not on a pre-set path", sterling tumbled and is being pressured lower with the BOE press conference ongoing.
GBP/USD was trading around 1.2175 going into the decision but has now fallen by over 100 pips to 1.2070 on the day. Bailey's mention of September not being a guarantee for a 50 bps rate hike has dragged the quid lower in the past half-hour.
Meanwhile, the dollar is mostly little changed with some light pushing and pulling awaiting the US jobs report tomorrow. The aussie and kiwi are slightly higher but the gains aren't anything to shout about. Some key levels outlined here.
Elsewhere, equities are holding up with European indices posting modest gains after a decent advance yesterday. That is in part catching up to the Wall Street rally and US futures are also mildly higher on the day now after some flattish trading earlier.
Casting the BOE aside, markets are calmer and the mood is more measured as we settle down and look towards the US non-farm payrolls release tomorrow.
