BoE Waters Down Rate Hike Expectations

The Bank of England, in its monetary policy announcement yesterday left interest rates unchanged at 0.50% with no change to the MPC's rate count with one dissenter in favor of a rate hike while 8 members voted to keep rates steady. The Bank of England released its quarterly inflation expectations report where it significantly lowered the near-term outlook. The Central Bank said that it expects CPI to remain below 1.00% into the second half of 2016, pushing back the rate hike expectations into the first quarter of 2017. On the unemployment front, the BoE expects to see the UK's unemployment rate at 5.00% in two years. On the positive side, the BoE revised its quarterly GDP expectations and said that third quarter GDP could be revised to 0.60% after preliminary estimates put the number at 0.50%. GBPUSD posted sharp declines, closing yesterday at 1.5207.

The monthly nonfarm payroll report is due out today with the markets looking at a conservative estimate of 180,000 new jobs being added to the US economy in the month of October. The estimates are of course higher than the previous month's 142,000 print. On the unemployment rate, the median consensus estimates is for the rate to stay on hold at 5.10%. With the Federal Reserve reiterating that December's FOMC meeting will be a deciding event, the onus is on the unemployment numbers to continue supporting the view that the US economy is nearing full employment of 5.00%, which leaves only the consumer inflation as the final piece to the puzzle which has been consistenly below the Fed’s target of 2.00%. EURUSD continues to trade near monthly lows albeit closing