Sterling firmer

Sterling is firmer against both the euro and the dollar this morning ahead of the Bank of England’s monetary policy announcement later today, trading at just under 91p and at around $1.2950 respectively, while the euro has weakened by about a cent against the dollar since yesterday morning to trade sub $1.18 at the off today. European stocks ended with modest gains yesterday but their US counterparts ended marginally lower, while core bond yields were flat

The Fed left interest rates unchanged following yesterday’s meeting and said it “expects it will be appropriate to maintain this range (of 0% to 0.25%) until…inflation has risen to 2% and is on track to moderately exceed 2% for some time”, which it indicated could imply unchanged interest rates right through until at least the end of 2023

In its assessment of the economy, the Fed noted that “activity and employment have picked up in recent months but remain well below their levels at the beginning of the year”, adding that the “path of the economy will depend significantly on the course of the virus” which it said “poses considerable risks to the…outlook over the medium term”

ECB member Schnabel says the central bank is “ready to act if the incoming data is not consistent with the objective of our emergency measures to close the inflation gap that has emerged as a result of the pandemic” and is also continuing to carefully monitor developments in the euro exchange rate

The Bank of England announces its latest monetary policy decision at noon. While it has said it has scope to provide further support to the economy, it is likely to keep its powder dry today

Data due today includes final CPI inflation readings for August in the Euro Area and jobless claims and housing starts in the US