A tighter jobs market, soaring inflation (at +2.9% well above target) and rising personal debt would normally be the three ingredients for an interest rate rise announcement from the Bank of England today. But the refusal of British wages to rise meaningfully, let alone consistently, has held governor Mark Carney back – so far.
But with rates at a rock-bottom 0.25% there is room for a surprise shock. If Carney pulls the trigger the pound will surge against major currency pairs, the most important being the euro and the dollar. If rates don’t climb, keep an eye on the MPC member ratio in favour of a hike. More than two will give sterling a kick higher. All to be revealed at midday.
Overnight sterling was trading -0.03% down at $1.3204 while the euro was down -0.11% at $1.1875. Earlier this morning Reuters was reporting that prime minister Theresa May is poised to give a speech on the UK’s post-Brexit future with Europe on 22 September in Italy. US markets didn’t move much yesterday but all-time highs were still recorded with the Dow hitting 22,158 points.
- UK FTSE 100 7,379.70 -0.28%
- Dow 22,158.18 +0.18%
- S&P 500 2,498.37 +0.08%
- Nasdaq 6,460.10 +0.09%
- Nikkei 225 19,821.54 -0.22%
- DAX 12,553.57 +0.23%
- CAC 40 5,217.59 +0.16%
- Gold 1,325.90 -0.16%
- Oil WTI 49.21 -0.18%
Next upgrades profit outlook despite tricky sales
We start with a mixed trading update from Next with profits down -9.5% to more than £309m and a -2.2% total sales slump. However the performance was better than the retailer had previously anticipated, with a +5.7% sales surge from its Directory business to £868m.
Whilst the retail environment remains tough Next said its prospects "appear somewhat less challenging than they did six months ago. As a result, we are taking the opportunity to modestly upgrade our sales and profit guidance.” That means pre-tax profits of between £687m and £747m.
Waitrose margins slip while Morrisons sales surge
More evidence that things aren’t so rosy on the high street: John Lewis Partnership profits have tumbled by more than -50%. Much of this hit is accounted by major re-organisation costs as well as staff redundancies for the purveyor of goods to the middle classes. Operating margins at Waitrose tumbled -18% due to cost pressures.