Main exchange rates little changed

The main exchange rates are broadly unchanged this morning from where they were yesterday. The euro is trading in and around $1.1050 against the dollar (which is about a cent weaker than at the close of play last Friday) and at just over 86p against sterling (which is pretty much where it closed at the end of last week), while the pound is hovering around $1.28 against the dollar (having lost about 1.5 cents against the generally firmer US currency over the course of this week)

Bond yields in the core markets rose further yesterday, prompted by positive soundings around the US-China trade situation, with benchmark 10-year yields in the US climbing to just over 1.90%, their highest level since early August (and after setting a 2019 to date low of circa 1.45% in early September). Equivalent German yields  rose by around 10bps and are now yielding -0.25%, which is some 50bps off their recent lows (also set in early September)

The Bank of England left interest rates unchanged at 0.75% at yesterday’s monetary policy meeting, which was expected, but somewhat surprisingly the decision to do so was not unanimous with two (of nine) members voting for an immediate quarter point cut in rates.  The BOE noted that, looking forward, interest rates “could respond in either direction to changes in the economic outlook”: on the one hand, if global growth fails to stabilise or if Brexit uncertainties remain ‘entrenched’, rates might need to be cut; alternatively, if Brexit uncertainties diminish and the global economy steadies, a ‘gradual but limited’ increase in rates might be necessary

The European Commission has published its latest economic forecasts and, relative to its projections made last spring, revised down slightly its forecasts for Euro Area GDP growth in 2019 and 2020 t0 1.1% and 1.2% respectively (from 1.2% and 1.5%) with growth of 1.2% expected again in 2021

Data due today includes consumer confidence in the US