Having struck a fresh 7 week high against the dollar in the early hours of the session sterling slipped back as the BoE meeting drew closer, falling 0.2% against the greenback and a more pronounced half a percent against the euro. The currency wasn’t just affected by a case of pre-Bank of England nerves, but a weaker than expected construction PMI. Despite the bad news sterling’s weakness allowed the FTSE to post a 0.4% rise; that does, however, still leave the index floating around 2017 lows.
That sterling volatility should only intensify around lunchtime as the Bank of England reveals its latest inflation and growth forecasts. The generally strong string of UK data may have some investors expecting a slightly hawkish tone from Carney and co., especially if the central bank significantly upgrades its 2017 estimates. If that proves to be correct the pound could find itself hitting a few more highs against the dollar and the euro; if not then its current losses may widen.
Looking to the US open and following more aggressive comments from Donald Trump, this time about a refugee deal with Australia, the Dow Jones is set to dip by 60 points after the bell. The Dow has spent the last fortnight dealing with the realities of Trump presidency, with his disregard for America’s pre-existing global relationships a key source of concern for the index.
