Good morning,
The pound strengthened against the euro as investors await the publication of the minutes of the Bank of England’s August policy meeting for signs of whether policy makers are moving closer to raising interest rates.
The market has been speculating that there could be one or even two votes in favor of a rate hike this month. The risk is that the lack of wage growth inflation will keep the voting pattern at 9-0 for now. The pound could therefore remain on the back foot today. This follows yesterdays lower-than-expected July UK inflation print.
In the US later this afternoon we have the FOMC minutes. The dollar yesterday pushed to a four month high against the pound and a nine month high against the euro on speculation the Federal Reserve is moving towards raising interest rates. US reports this month have shown employers added more than 200,000 workers for a sixth month in July, while a gauge of manufacturing increased and housing starts quickened.
The German PPI figures were released this morning at 7am and have fallen more than expected in July suggesting further downside risks to the inflation outlook. The producer price index decreased by 0.1 percent on the month and 0.8 percent on the year in July. The PPI measures the average change in price of goods and services sold by manufacturers and producers during a given period.
MORNING MARKET RATES:
GBPEUR 1.2499
GBPUSD 1.6628
EURUSD 1.3301
GBPSEK 11.459
GBPAED 6.1085
GBPAUD 1.7890
EURGBP 1.2519
GBPJPY 171.68
GBPTHB 53.100