Traders unmoved by BoE comments, US outlook a concern despite better data

MPC grilled as the central bank continues to fight double-digit inflation

We heard from some Bank of England policymakers earlier as they were grilled by the Treasury Select Committee on quantitative tightening, among other things naturally. Bailey and colleagues were quite consistent in their messaging and it’s probably what the Governor said on Wednesday that raised a few eyebrows as he insinuated that the UK could be seeing a wage-price spiral which could complicate returning inflation to 2%.

The members were still confident in their assessment despite repeated reminders of apparent past failures and markets seem unconcerned about the supposed wage-price spiral, continuing to price in one, maybe two, hikes this year. Things should become much clearer very soon.

US data still points to weakness in the economy

The US data released today won’t do much to change people’s views on the economic situation in the country right now. The jobless claims data indicates more resilience than anticipated but the trend remains higher and will likely accelerate. While the manufacturing surveys can be noisy, as we saw with the Empire State earlier this week, overall the sector remains weak and only represents a small portion of the US economy.

Deeper correction possible despite consolidation

Bitcoin is continuing to consolidate after previously slipping below $27,000, a break that could have been the catalyst for a steeper decline and may still be. The recent trend is still very much against it and the consolidation doesn’t really change that. And let’s face it, another move lower still leaves it with a very healthy gain since the start of the year and in a strong position. The next notable support level below appears to be $25,000.

For a look at all of today’s economic events, check out our economic calendar:

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.