With little economic data of note out, investors expected Wednesday to be a relatively quiet day for sterling. However, as news broke of a multi-billion pound merger between two energy companies, with Shell announcing their intention to purchase BG Group Plc. for roughly £47 billion, sterling found unexpected strength against both the euro and the dollar as investors looked to get behind the currency. With BG Group being based in the UK, Shell will need to buy a lot of sterling thereby lending it support. This boost may be short lived as lingering fears over the UK general election are likely to re-exert their control later in the month.
Today we will see confirmation of the latest interest rate decision from the Bank of England. This is highly unlikely to have changed from the current 0.5% level, but investors will then be eagerly awaiting the release of minutes from this meeting later in the month to gauge policy makers views on monetary policy moving forwards.