The British pound has popped higher after the Bank of England decided to keep interest rates on hold. A surprising annual rise in Chinese exports has bolstered overall sentiment, but more heated language directed at China from the US is a rising source of anxiety. Stock markets had taken a turn for the worse on Wednesday when private payrolls data showed that over twenty million Americans lost their jobs in April.

Bank of England

The Bank of England has held rates at a record low of 0.1%. The decision not to expand bond-buying with more printed money gave the pound a small uplift. Two dissenting votes for an extra £100 billion in quantitative easing capped the gains. It’s a wait-and-see for now, but the path of least resistance at the BOE seems to be for more stimulus.

Shares

Shares of Telefonica rose in reaction to its deal with Liberty Global to merge O2 and Virgin Media in the United Kingdom. It creates a new telecoms powerhouse to compete with BT. The combination will bring extra bargaining power to potentially achieve what the two entities by themselves never could. Ofcom might finally order the breakup of BT and Openreach.

It was a double whammy for BT shareholders: the emergence of a huge new rival and the suspension of dividends for two years.

Forex

The pound has risen over the euro (GBP/EUR) in reaction to the BOE decision to leave its bond-buying program at current levels. No extra UK money printing, for now, means the pound has an edge over the euro, which faces a small but rising risk of breakup after Germany’s constitutional court questioned the proportionality of its actions. The biggest downside risks for Sterling are a more sustained risk-off mood in markets and the UK falling further behind in exiting lockdown.

Commodities

The price of oil is down following a rise in US inventories that saw storage capacity returns re-emerge. It’s a pullback from a two-weekly rally that carried Brent crude to just short of $30 per barrel. Gold is holding steady near $1700 per oz before Friday’s big US jobs report. Copper just hit a 1-week high helped by China exports.

Opening calls

Dow Jones is set to open 182 points higher at 23,846.

S&P 500 is set to open 25 points higher at 2873.