Following the long bank holiday weekend, sterling continued to improve its position yesterday in the absence of any major economic data releases. Following a week in which unemployment in the UK was shown to fall below 7%, sterling continued its recent strong form, reaching a seven-week high against the euro in advance of the release of minutes from the latest meeting of the Monetary Policy Committee (MPC) today. Gains were also seen against the US dollar, although this was tempered somewhat by better-than-expected existing home sales data from the US.
A shift in the sentiment of policy makers towards raising borrowing costs is expected from the release of today’s MPC meeting minutes. These minutes will be carefully scrutinized for clarity on timing for such increases and any deviations from expectations will have an effect on sterling strength.
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