Sterling marks time ahead of Interest Rate decision
Sterling remained quiet to soft ahead of lunchtimes MPC announcement where an interest rate increase of 0.25% (to 0.75%) is being widely anticipated. Aside from the usual few moments of optimistic pricing in the immediate aftermath of the announcement, there is little to affect the market here. Indeed, the only likelihood of any volatility would be the absence of any such rate increase. While this is likely to have a small knock-on effect with UK equities, any rate rise is already priced in here too. However, UK equities feel slightly more fragile than the currency, and we have today opened below the short-term 7650 support level. We anticipate interim support around 7490/7500, and a definitive break below this removes the last barrier for a fall below 7000. This is undoubtedly in part to the uncertainty over Brexit, with the current Government policy in an astonishing shambles and a leader whom many party members would like to replace immediately. Theresa May has cut short her holidays to try and prop up her disastrous Chequers plan by making more concessions to the French, but at this stage, the only thing she could bring back from France that would find the public favour that she so desperately needs is a guillotine.