Even though the market is looking forward to the Bank of England policy meeting today, the big story of the day is the sharp increase of the U.S. dollar overnight.
Greenback rose against all the majors on Wednesday and early Thursday due to a rise in Treasury yields and U.S. President’s statements for lower corporate taxes. On the front of economic indicators, the monthly budget statement showed a deficit of $108.0B in August against market forecasts of $119.5B and $43.0B.
The British pound dropped versus the G10 currencies on Wednesday despite the better than expected inflation report. The ILO unemployment rate for the three months to July dropped to 4.3% from 4.4% before while the claimant count change, which presents the change of the number of unemployed people in the U.K. came out -2.8K, below market expectations to rise by 0.6K. The average earnings including bonus for the three months to July kept the same pace of growth of 2.1% despite forecasts to pick up by 2.3%.
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