Sterling jumps on BOE vote

Today's Highlights

• Sterling jumps on BOE vote

• France in limelight for wrong reasons

• Rand weaker after bank failure and rating downgrade

FX Market Overview

To call the beheading of an innocent US Journalist an 'execution' seems to give this vile act an air of legitimacy that it doesn't deserve. It is premeditated murder. That is all. A murder committed against an unarmed individual who was not involved in the conflict. There is nothing legitimate about that grotesque deed. So would the press please stop referring to this poor man's death as an execution? Call it what it is.

Rant over and back to the money markets. Sterling had another bad day at the office after inflation dropped to an annualised 1.6%. That was significantly lower than last month's 1.9% although it was largely in line with forecasts as discount wars rage on the high street and the stronger Pound is keeping import costs low. What it did do was remove any real chance of a 2014 interest rate hike from the Bank of England. We will get the minutes from their last meeting this morning and that should reflect the same 'wait and see' approach that the markets are expecting. The best bet at the moment for the 1st interest rate hike in Q2 2015. Sterling remains rather depressed.

This evening brings the minutes from the last FOMC meeting at the Federal Reserve. They too are in a quandary over when to start raising borrowing costs but they are removing some of their monetary expansion policies before that starts to happen. Nonetheless, traders will scrutinise those minutes for signs of an early interest rate hike. The Dollar is in good form as we head into that news but it hasn't made any more progress since the rebound last week.

France is being branded the party-pooper as far as the Eurozone recovery is concerned. Whilst growth isn't good anywhere in Europe, France hasn't grown for 6 months and could well dip into contraction. High taxes, obstacles to business growth and nervous consumers are all cited as causes of the French malaise but the French government returns to work after the summer recess today with a big problem on their hands. The Euro is sliding against the US Dollar but is keeping pace with the Pound as I write.

South African banks are in the spotlight after the failure of African Bank Investments Ltd. (ABL) and the news that Moody's has downgraded the big 4. That has weakened the Rand and today's CPI inflation data may well do more of the same.

And there was a list in many papers yesterday of some of the best jokes from this year's Edinburgh fringe. I have listed a few below but one of my favourites is from Tommy Rowson; "Pigeons are just like doves - except no one invites them to weddings."

STOP PRESS ******BOE VOTES 7-2 ON INTEREST RATES. 20 VOTES FOR A RATE HIKE******STERLING JUMPS HIGHER*******