Sterling gains further ground

The pound has gained further against both the euro and the dollar, to trade at around 84.5p and north of $1.31 respectively, as the market pares back slightly its expectations for a Bank of England interest rate cut at the end of this month, though it still thinks it’s more likely than not that rates will be lowered by 25bps at the January 30th meeting. Meanwhile, the euro-dollar rate is again largely unchanged trading at just under $1.11 (which is where it has been most of the time this week)

Equity markets were mixed yesterday, with European stocks closing a little lower and US indices ending a touch higher, but really they just treaded water, as indeed did bonds with yields unchanged to marginally lower in the case of US and German 10-year yields

The latest CBI survey of manufacturing in the UK reports that “business optimism improved significantly in…January, at the fastest pace since April 2014″, adding that with “some of the squeeze on investment plans lifting, it’s clear manufacturers are entering the new year with a spring in their step… firms are now planning to invest more in plants and machinery”

The ECB meets today but, with signs that growth is stabilising albeit at  modest pace and inflation is picking up albeit from a low level, is expected to stay on hold, while it will also formally kick off a year-long review of its monetary policy strategy

Data due today includes consumer confidence in the US and jobless claims in the US