• Bank of England holds its fire, signals easing in August The Bank of England surprised most economists and market participants yesterday by keeping its benchmark interest rate unchanged with an 8-1 vote. The consensus was for a 25bps rate cut. The Bank noted that most members of the Committee expect monetary policy to be loosened in August and that the exact size and nature of these measures will likely be determined by the August Inflation Report forecasts. Although the Bank appears ready to do whatever it takes to support the economy, the pound surged on the Bank’s decision to hold its fire, mainly because the market was pricing in a large probability for a July cut. However, given that officials left the door wide open for action in August, we will treat sterling’s short-term uptrend as a corrective move of the currency’s overall downtrend. Potentially soft post-referendum data combined with expectations for further easing could bring GBP under renewed selling interest over coming weeks. Additionally, any signs of slowing investment inflows to the UK could lead to speculation regarding a widening current account deficit, something that could weigh on the pound as well.

• China’s Q2 economic growth beats forecast China’s GDP growth for Q2 remained unchanged at +6.7% yoy, beating the forecast of a modest slowdown to +6.6% yoy. June’s retail sales and industrial production both accelerated, exceeding estimates of remaining unchanged and slowing respectively. The only disappointment in the report was fixed asset investment for the month, which slowed by more than expected. Overall, these data are likely to ease some concerns over a potential “hard landing” in China, especially with stronger retail sales suggesting that consumer spending may be starting to pick up. We believe that this could keep market sentiment elevated for a while.

• Today’s highlights: During the European day, Eurozone’s final CPI for June is expected to confirm its preliminary estimate.

• From the US, we get June’s retail sales and CPI data. Headline retail sales are expected to have slowed, while the core rate, which excludes automobile sales, is expected to have remained unchanged. This suggests that the only grey spot in the report may be a slowdown in auto sales. As for the CPI data, both the headline and core rates are expected to have ticked up. The forecasts are supported by the ISM manufacturing and non-manufacturing PMI reports for June, whose price indices declined somewhat, but remained well within the expansionary territory. Bearing in mind that all these data are released at the same time and are expected to show mixed results overall, the reaction in USD could remain somewhat limited at the release, unless we have significant surprises. The nation’s industrial output for June and the preliminary U of M consumer sentiment index for July, are coming out as well.

• In Canada, manufacturing sales for May are expected to have fallen, something that could reverse some of the Loonie’s gains from Wednesday.

• We have two speakers scheduled for today: BoE Governor Mark Carney and Minneapolis President Neel Kashkari.