Market Comment - 3rd February 2022

Posted by Stuart PritchardFebruary 3, 2022

Good morning,

Well what a day ahead!

Not only is there an absolute raft of data out today that can affect the markets there are also a couple of huge geopolitical pieces of news on the table.

So let's start with the factual information that we know.

Firstly there is the Bank of England Interest Rate Decision. Traders and analysts are expecting an increase of 0.25% to 0.5% to curb inflation. This has been fully priced into the markets. What that means is if the increase is exactly 0.25% we shouldn't see much volatility. However anything either side of that could see some serious moves. Less than 0.25% expect the Pound to fall. Greater than 0.25% expect the Pound to break out to the upside. At the same time there's the BoE's decision regarding financial stimulus referred to as the Bank Asset Purchase Facility.

Hot on the heels of this is the European Central Banks Interest Rate Decision. Analysts are expecting the rate to remain unchanged at negative 0.5%. Again anything either side of that will have the same effect on the Euro.

Then we've got the Bank of England's Governor, Andrew Bailey, giving his speech and summary of the decision being made by the Bank of England.

If that wasn't enough we then have the ECB Press Conference providing the Eurozone overview of decisions made and short term forecasting.

As an aside there's also the Institute for Supply Management (ISM) in the States giving us their data around services and factory orders.

Wow. What a day.

Now onto geopolitical events. UK consumers potentially face huge increases to their energy bills from April this year. Ofgem will be announcing their new price cap later this morning. On the back of this the Chancellor, Rishi Sunak, has announced a press conference later about this very matter.

And then we have Boris Johnson and Partygate. Pressure is mounting from the back benches for a call of no confidence in the PM.

As ever we look forward to keeping you in the loop and look out for our next update.

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Today’s Economic Calendar

UK: 11:00 Ofgem Price Cap Decision

UK: 12:00 BoE Interest Rate Decision and Bank Asset Purchase Facility

UK: 12:30 BoE Governor Speech

EUR: 12:45 ECB Interest Rate Decision

EUR: 13:30 ECB Pres Conference

US: 15:00 ISM Data

UK: 17:00 Rishi Sunak Pres Conference

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