08/02/2018 - Investors Wary Of Adding Positions Ahead Of BOE Meeting - 08/02/2018
Sterling edged lower on Wednesday, heading back towards a 2.5 week low hit in the previous session as a central bank meeting on Thursday kept investors wary of adding positions aggressively amid a broad dollar bounce.
The currency has been hurt by the general flight from risk and also weighed down by this week’s surveys confirming the poor shape of Britain’s economy and fresh tensions over its divorce negotiations with the European Union.
British Prime Minister Theresa May and finance minister Philip Hammond will meet representatives from major Japanese businesses on Thursday as concerns about Brexit grow among some of the world’s biggest foreign investors.
Japanese firms have spent billions of pounds in Britain, encouraged by successive governments promising a business-friendly base from which to trade across the continent.Many Japanese drug companies have made Britain their European base in recent years and are worried, like their peers, about the future of drug regulations, with any divergence with the European Union likely to pose regulatory challenges.
Banks Nomura, Daiwa Securities and Sumitomo Mitsui Financial Group have London bases but have already decided to set up operations in Europe to retain access to the single market as they await clarity on future trading arrangements.
Many businesses fear Britain could face a disorderly Brexit that would weaken the West, imperil Britain’s $2.7 trillion economy and undermine London’s position as the only financial center to rival New York.
The BOE also releases its inflation report on Thursday. BOE Governor Mark Carney has said wage growth is finally picking up and that the focus of the BoE is shifting back to tackling above-target inflation. Analysts reckon any further positive forecasts on the economy might prompt investors to add positions in the undervalued currency.
12.00 – GBP – BOE Inflation Report
12.00 – GBP - MPC official Bank Rate Votes; Forecast the same as previous at 0-0-9
12.00 – GBP - Monetary Policy Summary
12.00 – GBP – Official Bank Rate; Forecast same as previous at 0.50%