Central Banks meetings to dominate tomorrow’s trading

Tomorrow morning the Bank of England and the European Central Bank will hold their monthly meetings. While the monthly meetings of two of the world’s largest and most influential financial institutions would routinely have an effect on the markets in one way or another, investors will be scrutinising any and all information that comes out of the meetings a lot more closely than usual due to the American market is being closed for their Independence Day.

European Central Bank Meeting

The primary focus of the European Central Bank’s meeting is likely to be whether or not the Eurozone requires further monetary easing. Unfortunately, it is unlikely that we will hear anything concrete from the meeting until the minutes are released later this month. With there being so many different routes that the ECB could take it will be hard for investors to gauge what the potential fallout from such hypothetical situations would be.

Going into the meeting there has been very little said about what measures could be taken, other than Mario Draghi’s confirmation that the central bank is “technically ready” for the implementation of negative interest rates. However with the turmoil this would cause throughout the Eurozone it is unlikely to be implemented without any real prior warning.

Bank of England Meeting

In London Mark Carney will attend his first Bank of England meeting as its new governor. It is widely expected that Mr Carney will not make any waves, instead allowing current policy is to run while he gains a better understanding of what he is working with.

However, if the new governor wanted to announce his arrival and make his intentions clear then there would be a good possibility that he would do so by increasing the quantitative easing, which currently stands at £375 billion, by a further £25 billion as was the desire of his predecessor, Sir Mervyn King. This would of course have a massive effect on the British Pound, diluting its value and would likely cause it to fall against all of its major peers.