Sterling under pressure

Sterling fell to over 88p against the euro yesterday after Bank of England Governor Mark Carney said now is not the time to increase interest rates, citing still subdued domestic inflationary pressures, particularly ‘anaemic’ wage growth, and saying that he wants to see how the UK economy reacts to the ‘reality of Brexit negotiations’

The dollar continues to regain some ground – it is trading at just over $1.11 against the euro this morning, more than a cent off its lows of late last week – as Fed members point to the likelihood of further increases in interest rates

Oil prices dropped further yesterday, with Brent crude at circa $46 now more than $10, or 20%, off its highs earlier this year. Lower oil prices, if sustained, will put renewed downward pressure on headline inflation rates in the major economies

The fall in oil prices dragged down energy stocks, which in turn contributed to a decline in equity markets (European and US indices closed more than 0.5% lower). Bond yields in the core markets ended the day slightly lower, reversing some of Monday’s rise

Quiet day again on the data front with home sales data in the US due