Fundamental Analysis – Cable Demolished By Dovish BOE August 03, 2017

Pound Trading In The Red

The Cable has taken a hit from the BOE today, as you already know, the Official Bank Rate was left unchanged, at 0.25%, matching expectations. The interest rate remains steady since August 2016 when was decreased from 0.50%. The MPC members voted by a majority of 6 to 2 for this decision, the Pound plunged versus all its major rivals after this decision, the bulls were disappointed.

BOE maintains unchanged the Asset Purchase Facility, at 435B, matching expectations, the MPC members voted unanimously for this decision. BOE Carney sustained that the economic growth will remain sluggish and also that some tightening will be needed in the upcoming three years.

The Pound has turned to the downside even if the United Kingdom Services PMI increased from 53.4 to 53.8 points, beating the 53.6 estimate and signaling a further expansion.

USD Uninspired By US Figures

US dollar remains sluggish after the United States data publication, the figures have come in mixed and weren’t able to boost the currency. Unfortunately, the greenback lost some ground versus its rivals in the second part of the day also because the ISM Non-Manufacturing PMI plunged from 57.4 to 53.9 points, has come much below the 56.9 estimate.

The Unemployment Claims dropped again after one week increase, were reported at 240K in the previous week, below the 242K estimate and much below the 245K in the former reading period, while the Factory Orders surged by 3.0% in June, beating the 2.9% estimate, the orders rallied after the 0.3$ drop in May. Moreover, the Final Services PMI surged from 54.2 to 54.7 points, exceeding the 54.2 estimate, the Challenger Job Cut dropped by 37.6%, more versus the 19.3% drop in the former reading period, but failed to help the dollar to stay higher against its counterparts.

By Olimpiu Tuns

Market Analyst

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