The Bank of England is very much expected to raise rates for the first time since 5 July 2007, many people will never have experienced this phenomenon in their adult life. The important thing today, if we do get the rate rise we expect, will be the tone of the minutes and what is written and said at the Bank’s Quarterly Inflation Report. Futures contracts are pricing in future rate rises next year with around 50% of traders expecting rates around 0.75-1% by the end of next year. Brexit will be a big concern for the Bank and they may adopt a ‘wait and see’ approach to future rates.
British manufacturing is in on the up, as the Manufacturing Purchasing Managers Index (PMI) for October reveals impressive final quarter data. The Manufacturing PMI rose to 56.3, an increase of 0.4 from last month, and higher than market forecast. The increase in export orders and higher domestic demand further enforces the bullish sentiment for GBP. The continuing trend of strong manufacturing levels, with this being the 15th consecutive month of growth further enhances the expectation that the Bank of England will raise interest rates later today