BoE stays on hold

The Bank of England stayed on hold, as expected, with a unanimous decision. Sterling slid a little initially post decision and is touching off 89p to the euro again this morning. The Bank said that the risk of a no-deal Brexit had risen and that downside risks had increased. The BoE reiterated its guidance for limited and gradual rate hikes but that depends on a ‘smooth’ Brexit

The fallout from the Fed’s dovish conclusion on Wednesday continued with the dollar losing a bit more ground to the euro and back up close to $1.13 again. Equities were higher – the S&P is at a record – while bonds gained in anticipation of looser monetary policy in the US and Europe. Bond yields continue to grind lower with 10 year treasury yields down to 2.0% and 10 year bunds at -0.3%

On the data front, UK retail sales for May were weaker than expected with the annual rate dipping to 2.3% from 5.1%. This adds to a number of other signs that suggest weak or flat economic growth in Q2 in the UK. In the US, the Philly Fed for June came in at 0.3, a four month low, from 16.6 in May. This is the latest in a series of US manufacturing sector sentiment indicators that have slid recently, evidence that the tariff wars are starting to bite

Data due today includes euro area flash PMIs, existing home sales in the US and speakers include Tenreyro from the BoE