In the absence of any meaningful economic data today investors are looking ahead to tomorrow’s Bank of England interest rate policy and FOMC minutes. For some time now the markets have been of the thinking that the impending monetary tightening cycles from the Federal Reserve and BOE will move neatly one after the other, with the Fed hiking in either September or December this year and then the BOE soon after that. This consensus has now been thrown out the window following the recent poor run of economic data as investors accept that interest rates are set to stay lower for longer. For many this is hard to fathom considering that a commencement of the monetary tightening cycle from one of either the Fed or the BOE has been much anticipated throughout this year. We are now seeing plenty of evidence to suggest that for both these central banks this tightening cycle isn’t set to start until well into 2016 and who moves first is open to debate. Tomorrow’s MPC voting and BOE minutes will be of great interest and an absence of any more hawks joining Ian McCafferty in his calls for a rate hike could put further downward pressure on sterling.
Today does see the release of UK industrial and manufacturing production where both are set to rise 0.3%. Considering the shock figure from Germany already this morning investors shouldn’t be surprised if they see a worse than expected number.
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