Today is a big day for the pound given the upcoming Bank of England interest rate decision and press conference. The BoE is widely expected to raise rates. Looking at bond markets, expectations for a BoE rate hike are currently above 85%. If the Bank fails to raise rates, this would be a very significant disappointment for the pound and the currency is likely to be materially weaker as a result. The British pound is up against the dollar this morning, while remaining flat against the euro. Yesterday, the pound was supported by strong manufacturing PMI figures, which suggests ongoing growth in the economy. The pound has been quite strong this week thanks to hopes of higher interest rates and a likely breakthrough in Brexit negotiations.
GBP/USD is currently just above 1.3270. EUR/GBP was flat yesterday and remains flat this morning. The pair is currently trading above 0.8780. The pound is flat against both the Australian dollar and the Canadian dollar today, after weakening yesterday. GBP/AUD is below 1.7190, while GBP/CAD is just above 1.7030.
Consumer credit was higher than expectations (1.6b vs. 1.5b expected), while mortgage approvals were lower than the previous figures (3.8b vs. 3.9b). Consumer confidence remains gloomy (-10 vs. -10 expected). Nationwide house prices show continued growth (2.5% vs. 2.2%). Markit manufacturing PMIs beat expectations (56.3 vs. 55.8 expected). Today is the key day, with the BoE interest rate decision, monetary policy summary, minutes and inflation report. We'll also see Markit Construction PMIs today. Last week, GDP figures beat expectations.