Good morning,

Sterling climbed to its highest level in over a week against the USD, 1.2638, however those gains have been reversed this morning as sterling comes under selling pressure before the Bank of England interest rate announcement at mid-day.

Across the pond the Federal Reserve raised their interest rates by 0.5%, the sharpest rise in interest rates in over 20 years, however Fed Chairman Jerome Powell ruled out a 0.75% hike in interest rates in the immediate future, taking steam out of market speculation that the Fed would further ratchet up its pace of interest rate hikes.

Powell stated that further 0.5% moves “should be on the table at the next couple of meetings” but clarified that “a 0.75% increase is not something the committee is actively considering”.

In the UK, markets are expecting a 0.25% interest rate hike by the Bank of England, but it will be important to note how many members vote for a more aggressive 0.5% hike or no change at all, which will be the key driver for Sterling.

Boris Johnson has renewed Brexit woes by giving the EU “one last chance” to compromise over the Northern Ireland protocol. Away from interest rates and Brexit news we have the US jobless Claims and Nonfarm Productivity ahead of Friday’s US jobs report.

Have a great day.

Joseph Sidders, Relationship Manager.

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