The ECB hiked interest rates by 0.25% to 2.25% last week, as was widely predicted. The Bank of England meet this Thursday, and are almost certain to leave UK interest rates unchanged. Then next week the FOMC meet, which should see another 0.25% added to US rates, so a busy ten days ahead for the central banks.
Sterling’s strength has persisted, despite a gloomy assessment of UK economic growth from the Organisation for Economic Co-operation and Development. The report also said that despite weak growth, there would be no justification for allowing interest rates to fall next year, as inflation remained a threat. This is the comment that has helped sterling over recent days.
Gordon Brown will deliver his pre-budget report this afternoon. His previous growth forecast of 3% will have to be severely revised (most economists are now saying 2005 growth will be around 1.7%), but no doubt he will move the goal posts and still manage to claim substantial success in managing the economy.
GBP EUR – Support 1.4740 then 1.4700
Resistance 1.4800 then 1.4830
GBP USD – Support 1.7250 then 1.7200
Resistance 1.7320 then 1.7380
DATA: UK PMI services (09:30)
EMU Retail Sales (10:00)
US ISM non-manufacturing and Leading Indicators (15:00)
UK Pre-budget report (15:30)
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