THURSDAY’S Bank of England meeting is likely to see the Monetary Policy Committee leave interest rates unchanged, especially in light of yesterday’s April Manufacturing PMI data, which came in below expectations. This has reinforced concerns about the growth potential for the second quarter. This will in turn limit the upside in any sterling strength, especially now that euro-sterling has broken above its October 2010 highs at £0.8940. CMC Markets offers a spread on euro-sterling of £0.89695-£0.89713.
The weaker than expected UK PMI Manufacturing figures – coming in at 54.6 versus the 57 expected – also accelerated sterling-dollar losses early yesterday morning. The pair fell a total of 176 pips to a low of $1.6466, so it is now shaping up like it has put in a firm double top around the $1.6738 area. Should the pair recover to the $1.6560 area on a rebound look to sell for a run back towards $1.6250. Spread Co quotes a spread on sterling-dollar of $1.6492-$1.6494.
Markets have been jittery in the last 24 hours and this is boosting demand for the safe-haven yen. Dollar-yen is now back below ¥81.00 and it is surely only a matter of time before the Bank of Japan intervenes, possibly with the cooperation of the world’s other major central banks again. We could be on the cusp of a sharp reversal for the yen. Forex.com offers a spread of ¥80.77-¥80.79.
The Canadian dollar has had a relatively good time of it recently, strengthening against the dollar nicely in the last few weeks. The Loonie added to its recent gains overnight after the Conservative party did better than expected at the elections. Selling dollar-Canadian dollar rallies has proved to be a winning strategy over the last two weeks. Expect to see sellers around $0.9550 for a retest of $0.9450. ETX Capital offers a spread of Ca$0.95.34- Ca0.$95.38.