A busy day on the central bank front yesterday and we’ll begin with the Bank of England (BoE). The BoE held rates as widely expected but stuck to its previous guidance of maintaining a “gradual and careful approach” to their policy cycle. But there was a surprise with three members voting to cut rates, one more than expected, with Ramsden joining Dhingra and Mann. As a result, markets increased the probability of a rate cut in August from 75% to 80%. The dovish vote, however, was tempered by the BoE stating the Bank will “remain sensitive” to the recent surge in energy prices.
The Swiss National Bank (SNB) cut rates to 0% and suggested in their statement they would keep an open mind for further policy easing but any decision to take rates below 0% won't be taken lightly.
Read more about the Bank of England and Swiss National Bank's interest rate decisions here:
*Daily move - against G10 rates at 7:00 am, 20.06.25
** Indicative rates - interbank rates at 7:00 am, 20.06.25
The White House announced last night that the US will decide within two weeks whether the US will join Israel in its strikes against Iran, as satellite images show Tehran is racing to get its oil out and filling storage tanks. Following this development, markets this morning have opened with higher risk sentiment resulting in a weaker US dollar.
Pound sterling is marginally weaker after retail sales dropped faster than expected in May. The data supports the notion that households remain cautious in their spending habits and for Q2 GDP growth to be around 0.1%.
Read more about the Bank of England's interest rate decisions here - When is the next BoE interest rate decision?
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