Central Banks and Labour Data in Focus: SNB, BoE Decisions and UK Employment Report Expected

Markets are bracing for a busy European session on Thursday, with the Swiss National Bank (SNB) and the Bank of England (BoE) set to announce their latest monetary policy decisions, alongside the release of the UK employment report.

The SNB is widely expected to hold its policy rate at 0%, reiterating its long-standing stance that the bar for negative rates remains very high. The central bank is likely to reaffirm its "increased willingness to intervene in foreign exchange markets" when necessary, a position it has consistently maintained.

Across the English Channel, the BoE is forecast to keep its Bank Rate steady at 3.75%, with analysts anticipating a 7-2 vote split. Recent economic data has been benign, with inflation metrics coming in below expectations and labour market data continuing to show weakness. A key factor influencing the outlook is the conclusion of the US-Iran war, which has driven oil prices sharply lower. Brent crude is now trading below $80 per barrel, significantly undercutting the BoE's optimistic forecast average of $108 per barrel. The central bank is expected to maintain optionality in its statement, though some observers see a possibility of a more dovish tone, potentially leaning towards an unanimous hold.

The UK employment report is expected to show 75,000 jobs added in the three months to April, with the unemployment rate remaining unchanged at 5.0%. The previous report indicated a ticking higher in the unemployment rate and a significant drop in payrolls for April, though the Office for National Statistics (ONS) noted that the early April estimate carried greater uncertainty due to the change in the tax year.

In the American session, focus will be on the weekly US Jobless Claims data. Initial claims are expected at 225,000, down from 229,000 the prior week, while continuing claims are seen at 1,789,000, compared to 1,795,000 previously. US jobs data has been solid for months, and the end of the war is expected to further boost business and consumer sentiment. Markets are not anticipating a major reaction unless the data deviates significantly from expectations.

Throughout the day, several European Central Bank (ECB) officials are scheduled to speak, including Joachim Nagel (hawkish), Pierre Wunsch, Fabio Panetta, and others, providing further insight into the eurozone's monetary policy direction.