UK CBI Industrial Trend Orders Survey Shows no Improvement

It was a relatively quiet start to the day on the UK economic calendar.  The UK CBI Industrial Trend Orders Survey drew interest this morning.

The CBI Industrial Trend Orders Index held steady at -20 in April, the equal lowest figure since -24 in February 2021.

Following the March inflation numbers, the Monetary Policy Committee doves need reasons to avert another interest rate hike. Weak economic indicators would provide a firmer footing, though the hawks are more interested in preventing inflation from becoming embedded in the UK economy than averting an economic recession.

Earlier this morning, Bank of England Deputy Governor Ben Broadbent discussed inflation, pointing out there is no evidence that the Bank’s quantitative easing (QE) bond-buying program contributed to elevated inflation.

The Deputy Governor attributed current inflation levels to supply chain disruptions caused by the pandemic and the jump in natural gas prices stemming from the Russian invasion of Ukraine, saying,

“As an explanation for the inflation we’ve experienced, I think this fits the actual data better than the single fact of strong household money growth during the pandemic.”

Deputy Government Broadbent’s speech and today’s economic indicators are unlikely to shift market sentiment toward BoE monetary policy moves. The markets are betting on a 25-basis point BoE interest rate hike to 4.50% on May 11.

The latest UK inflation figures pointed to more aggressive Bank of England policy moves to bring inflation to target. Last Friday, Bank of England Deputy Governor Dave Ramsden addressed the inflation issue, saying,

“When I look at where inflation is and where it needs to go, I’m more focused on making sure that (we) stay the course in terms of the monetary policy decisions needed to get inflation back to target.”

Ramsden added,

“(High inflation) is a bigger risk than over-tightening.”

GBP/USD Reaction to the UK CBI Industrial Trend Orders Survey

Before the CBI Industrial Trend Orders Survey, the GBP/USD rose to a pre-stat and session high of $1.25073 before falling to a low of $1.24562.

However, in response to the April survey numbers, the GBP/USD rose to a post-stat high of $1.24796 before falling to a low of $1.24664.

This morning, the GBP/USD was down 0.10% to $1.24724.

Next Up

Investors should monitor the Bank of England commentary, with inflation as the focal point. However, no Monetary Policy Committee members are on the calendar to speak this afternoon, leaving chatter with the media to move the dial.

Looking ahead to the US session, it is a busier day on the US economic calendar. US consumer confidence figures for April will draw interest.

However, economists forecast the CB Consumer Confidence Index to slip from 104.2 to 104. A fall below 100 would move the dial. There is no Fed talk for investors to consider. The Fed entered the blackout period on Saturday.

US house price numbers are also due but should have a limited impact on the markets.

Away from the economic calendar, US corporate earnings will influence market risk sentiment. Big names on the US earnings calendar include Microsoft (MSFT), Alphabet Inc. (GOOGL), Visa Inc. (V), McDonald’s Corp. (MCD), General Motors Co. (GM), and PepsiCo Inc. (PEP).