ECB & BOE Rate Decision Leave The Market Flat

Asian Morning Update

Unchanged policies from the Bank of England and European Central Bank were no surprise. However, there is a slight difference in the reaction to each decision. The market clearly has the bit between the teeth looking for a cut before the end of the year from the BOE, while the ECB still has a slightly hawkish bias.

The decision by the BOE was not entirely welcomed by the manufacturing and retail industries, although that can hardly be taken as surprising either. However, the sentiment that is now pervading the market is one of a high risk of a strong slowdown in the U.K. and while inflation remains towards the high end of the CB's target band this would be a negative scenario for the Pound. However, for now there is likely to be muted reaction as the greater sentiment is still Dollar bearish but the Pound may struggle to take full advantage of this. Yesterday's minutes are due on October 17th, nicely before the G7 meeting.

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