The markets were understandably muted this Thursday morning, as investors wait for November’s Bank of England meeting and maybe, just maybe, the first rate hike in a decade.
Though cable is up 0.1%, at just above $1.325 it’s still a way away from the $1.33-plus levels it saw before the dollar received a Fed-shaped, December rate hike-eyeing boost yesterday evening. Against the euro, meanwhile, the pound opened flat, the wrong side of €1.14 having struck a €1.145-grazing 3 and a half month intraday peak on Wednesday.
Sterling could be in line to return to yesterday’s highs if the Bank of England does indeed raise interest rates this afternoon. Most of the recent noise coming from the central bank has been hawkish, though the UK’s persistent fall in real wages, a slump in retail sales and some dovish noises from MPC members Dave Ramsden and Jon Cunliffe has introduced a bit of doubt in the past couple of weeks.
It’ll be interesting to see how the FTSE reacts to all this. The UK index has a history of sinking as sterling rises, though has managed to not stray too far from 7500 for the past month or so. Currently it’s down 0.1%, just below that landmark level, after it was hampered on Wednesday by the Next (LON:NXT) led retail sector decline.
Before the BoE decision the UK markets get a distraction in the form of the latest construction PMI. September saw the sector unexpectedly fall into contraction territory, hitting a 15 month nadir of 48.1; it is forecast to have remained in that region in October, with analysts estimating a still troublesome, if slightly improved, 48.3.
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