"Greece was a reason for maintaining rates" – MPC minutes send Sterling higher

Enrique Díaz-Álvarez23/Jul/2015Currency Updates


The key news yesterday was the release of the minutes from the July meeting of the Bank of England. They were quite hawkish. There was a 9-0 vote for no change, but clearly Greece ( an issue at the time) played a role in maintaining unanimity, as the minutes stated that for “some” (probably three or more) members, “Greece was a reason for maintaining rates”. But all of the MPC agreed that slack is shrinking.

Now that Greece is fading from the headlines, we would expect at least two MPC members to dissent at the next meeting and a slow build up towards a majority for an interest rate hike by February 2016. Sterling reacted very well and was the top performing G10 currency for the day, bucking the general sell off against the Dollar.

Sterling volatility this morning is likely to be dependent on the latest retail sales data for June from the Office for National Statistics at 9.30am. Another strong number will be good news for the Bank of England hawks, following on from claims last week by Mark Carney, that the economy could be ready for an interest rate hike around the turn of the year.


Another day with little macroeconomic news in the Eurozone. The details of the Greek agreement continue to get hammered out, and the European Central Bank granted another €900mm of liquidity assistance to the Greek banks, but this did not help the Euro. The common currency lost most of the previous day’s gains against the Dollar, which benefitted from strong housing data.

At 3pm this afternoon the European Commission is set to announce the latest consumer confidence data for the Eurozone. Since reaching an eight year high in April, the measure has dipped somewhat following continued uncertainty in Greece.


The US Dollar celebrated a spate of positive news from the housing sector. Existing home sales surprised to the upside at 5.49 million on an annual basis, a new cycle high. House prices also rose modestly. The Dollar rallied against every G10 currency except Sterling.

As usual, the US Department of Labor will be releasing its weekly jobless claims figures at 1.30pm this afternoon. Another strong reading around the 280,000 mark should put the US economy on track for another impressive monthly nonfarm payroll figure, set for release in the first week of August.

Rest of the world

The Turkish Lira had a particularly difficult day as markets reacted to a second apparent terrorist attack, in which two policemen were found dead at their home. This incident comes two days after a suicide bombing killed 32 people. TRY lost about 1% against the US Dollar, though it ended the day better than its worst levels.


Written by Enrique Díaz-Álvarez

Chief Risk Officer at Ebury. Committed to mitigating FX risk through tailored strategies, detailed market insight, and FXFC forecasting for Bloomberg.