Bank of England (BOE) minutes and employment preview

Though market will be influenced by FOMC monetary policy today, pound faces two high profile risk prior to the event.

The unemployment data & the BOE minutes will both be released at 8.30 am GMT. Pound is trading around 1.564 this morning. Key support lies at 1.548 area and resistance at 1.572.

1)     The Minutes-

• Market will try to assess, which way the monetary policy tilting to.
• Since BOE officials have maintained stance of not easing policy further, market will try to assess how hawkish policy is becoming. As of now BOE policy makers are unanimous in their decision to keep policy steady.
• However, with subdued inflation, it can't be said with certainty that some members would not be calling for further loosening.
• Presence of any dove in the member & pound will suffer big against the dollar.
• Presence of hawks will be bullish for the pound but we highly doubt that on the background of falling inflation to have follow-through, especially before FED meeting.
• Neutral will be less volatile and pound will continue to range trade with upward bias prior to FOMC.

2)     Unemployment Rate-

• Unemployment rate has been encouraging for UK for quite some time now. Trend is likely to continue.
• Unemployment rate has been falling for three consecutive release, as of now rate is 5.5%.
• With unemployment rate at such low levels, focus will be on earnings.
• Strong earnings growth will be price supportive of pound.
• Median expectation is, unemployment rate to remain at 5.5% and earnings excluding onus is expected to be at 2.5%.

Probable impact from some of the outcome is explained through the following table