Sterling saw positive movement on Wednesday after an independent research institute stated their belief that the Bank of England (BoE) would raise interest rates as early as February 2016. With growth in the services industry falling below expectations, we could have seen a downturn for sterling but the effect was muted as the sector still showed strong growth throughout July and there was disappointing data released elsewhere.
Investor attention yesterday was also keenly focused on forecasts from the National Institute of Economic and Social Research (NIESR). These showed an expectation for 2015 economic growth to reach 2.5% in the UK, and with belief that current conditions are pointing to an interest rate hike in February 2016. With the prospect of higher returns on their holdings, investors boosted sterling, pushing the currency to a two-week high against the euro.
Today we welcome the first ‘Super Thursday’ from the BoE, which will see the interest rate decision, minutes from the meeting, and inflation projections released simultaneously. This large volume of information is poised to cause some significant market fluctuations. The day ahead looks set to present investors with some great opportunities to take advantage of this movement.