After initially slipping back in early trade US markets recovered to trade back near their record highs, shaking off any concerns about the decision by President Trump to summarily dismiss FBI director James Comey.

One of the things it has done is polarise opinion on both sides of the political divide on Capitol Hill, and in the long run could well compromise or even delay the President’s intention to implement a number of his key programs, including tax and bank reform, which markets currently have heavily priced in.

The FTSE100 had a more positive day yesterday retesting the 7,400 level on the back of a sharp rebound in the crude oil price, after the biggest one week fall in US stockpiles this year, while Iraq and Algeria were reported to favour some form of OPEC cut extension, while Saudi Arabia announced it would cut back on its exports to Asia.

Earlier this year the Bank of England upgraded its growth forecast for 2017 to 2%, and in the process brought it almost back to where it was just prior to last year’s June Brexit vote. For that reason alone UK policymakers would do well to leave well alone when they update the markets on the outlook for the UK economy later today, given that in the last two years GDP in Q1 has started on a weak note only to pick up later in the year.

As it is the Bank’s forecasting ability has taking an absolute hammering in the last 12 months, having been too pessimistic in the lead-up to, and in the aftermath of last year’s vote. The one thing they have got correct is the fact that prices would go up, as the effects of a weaker pound exacerbated an effect which was already starting to push prices up across the world as commodity prices rebounded.

Having seen the UK economy get off to a bit of a slow start in 2017 there is the possibility that we may well see UK policymakers nudge their GDP forecast downwards, while it would also be a surprise if any other policymakers joined departing MPC member Kristin Forbes in calling for a rise in interest rates.

If anything, the data since that March meeting, apart from inflation, has been a little on the soft side which might suggest a possible change of heart on her part, however with CPI at 2.3% it is unlikely that she would change her position, given that at the last inflation report, CPI was running at 1.6%.

What would be surprising is if she finds other policymakers starting to lean in her direction with respect to a rate rise, with attention likely to fall on Ian McCafferty who, has in the past called for a rise in rates, as well as new boy Michael Saunders who suggested in a speech in April that the monetary loosening seen in August may well have had a much greater impact than expected, which might suggest that he might be inclined to lean more towards the hawkish side.

The most likely outcome is for the Bank of England to remain on hold, particularly with a General Election only a month away, with policymakers noting the slowdown in GDP, while arguing that the recent rise in the pound and fall in commodity prices is likely to take the edge off in inflation.

Before that we get to see how well the manufacturing sector ended Q1 with the latest industrial and manufacturing production numbers for March, with small declines expected to be seen for both of about 0.2%. along with the latest March trade numbers, which is expected to show a £3bn deficit.

EURUSD – currently finding support near the 1.0850 area with further support at the 200 day MA and 1.0820 area. A move back below 1.0800 could well see further losses towards 1.0640, thus filling the gap higher seen at the beginning of April.

GBPUSD – currently struggling to move beyond the 1.3000 area, but with dips currently fairly shallow the prospect of a move higher remains on the table for now. Support remains at last week’s low at 1.2820, with the 1.3000 area the next key hurdle to overcome, for a move towards 1.3300. Only a move below 1.2750 argues potentially back towards the 1.2600 area.

EURGBP – slid below the 0.8400 level yesterday which suggests that we could well see a retest of the 0.8300 lows of last month. We need to move back above the 0.8470 area to retarget the 0.8520 area.

USDJPY – remains on course for a retest of the March highs at the 115.00 level, having broken through the 113.00 area. Pullbacks are likely to find support at the 113.60 area as well as the breakout level of 113.00.

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