Positive ADP employment change figures were recently announced for the US. Analysts were expecting an increase of 179,000 new jobs, when in fact 200,000 were created. This could mean that Friday’s non-farm payroll’s report will be higher than expected. The first reading of second-quarter gross domestic product from the US also came in today; at 1.7% this figure too was higher than expected, as economists were only expecting a reading of 1.1%. As both sets of economic data were above analysts’ expectations, this has lead traders to believe that the Federal Reserve will look to tapering the stimulus package sooner rather than later.
Within the next 24 hours we will have two updates from central banks; the Fed will make their announcement tonight at 7pm and the Bank of England (BoE) will make theirs tomorrow at midday (both London time). We are not expecting a change in policy from either, but traders will be searching for any clues as to when their quantitative easing schemes will be reduced. If all nine members of the BoE vote against increasing the bond buying scheme, we could see the pound rally.