With little economic news of note released on Tuesday, sterling posted gains against both the euro and US dollar as news broke of a £3.5 billion bid by a Japanese company, Mitsui Sumitomo Insurance, to purchase UK insurer Amlin.
With investors recently pushing back dates on when the Bank of England (BoE) are likely to raise interest rates in the UK, sterling has found itself under pressure, falling to its lowest levels since June towards the end of last week. However, with a significant purchase of sterling likely to take place in the wake of this deal, sterling found support across the board. Confidence looks set to return to the British economy in general, with yesterday’s news increasing optimism over further cross border acquisitions.
We now look towards Thursday’s interest rate decision from the Bank of England (BoE), and perhaps more importantly, the meeting’s accompanying minutes. Preceding this, however, we expect industrial production figures from the UK today – these are expected to show a 0.2% increase throughout August. Given the disappointing Purchasing Managers’ Index (PMI) data released last week, investors will hope to see a strong performance from UK industry this week.