As the World Economic Forum in Davos gets underway businesses, investors and journalists are lining up to debate and get a better understanding of the action taken by SNB last week and what it means for the Swiss economy. Since what is being widely referred to as a “black swan” event, the EUR/CHF has stabilised at 1.1000 and remains a focus, along with all the other euro rates, as we go into tomorrow’s ECB meeting with the market now pretty much fully pricing in QE.
Ahead of the ECB we get some potentially market moving UK data releases this morning in the form of unemployment data which is expected to decline from 6.0% to 5.9%, with average earnings rising from 1.6% to 1.9%, but what might cause more of a move for sterling is the BOE minutes as we see how the MPC voted at the last meeting. Since the two members Weale and McCafferty started voting for a hike since last August they have remained consistent with their voting, but since market expectations of interest rate hikes from the BOE have receded and Governor Mark Carney has indicated that the UK could see deflation, there’s a chance one of them might reverse their call to hike. This has the potential to soften GBPUSD which has bounced from the mid 1.5000 area back to 1.5170 this morning. The unemployment data shouldn’t be ignored however, but it’ll need a much better than expected figure, as well as MPC voting to remain at 7-2, to see any further strength in GBPUSD, which from a technical standpoint remains in a downtrend.