Euro recovers ground

The euro has recovered ground against the dollar and is up almost a cent from yesterday morning to trade at just over $1.1850. Sterling is a touch firmer against the US currency at almost $1.30, leaving the euro-pound rate hovering just below the 91.5p level. Meanwhile, US equity markets closed lower yesterday while European stocks ended flat, and core bond yields were yet again virtually unchanged on the day

The Bank of England left policy on hold yesterday and said it is examining the possibility of adopting negative interest rates – the current interest rate is 0.1% – should the outlook for inflation and output warrant further stimulus

The BOE noted that “domestic economic data have been a little stronger than expected” but warned that “the recent increases in Covid-19 cases in some parts of the world, including the United Kingdom, have the potential to weigh further on economic activity, albeit probably on a lesser scale than seen earlier in the year”

Retail sales in the UK rose for a fourth consecutive month in August and were running 2.8% ahead of their level in the same month in 2019

ECB’s de Guindos says the central bank watches “very closely the evolution of the (euro) exchange rate and it’s impact on inflation and our target for price stability”

Data due today includes consumer confidence in the US