Wednesday October 3, 2007 - 10:14:32 GMT
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INVESTICA Ltd - www.investica.co.uk
Sterling Caution ahead of BOE
Sterling is likely be on the defensive ahead of Thursdayâ€™s Bank of England policy decision given the small possibility that there will be a cut in rates.
Sterling pushed to a 2-week high on a trade-weighted index on Tuesday with gains to 0.6945 against the Euro and a solid performance against the dollar with the UK currency hitting selling pressure above 2.04 on Wednesday.
There will still be further concerns over a sharp slowdown in the housing sector. In this environment, the UK currency is unlikely to gain strong support ahead of Thursdayâ€™s Bank of England meeting. There is certainly a possibility that rates will be cut even if an unchanged policy looks the more likely outcome.
The Nationwide Bank reported that consumer confidence rose in September which will provide some relief on consumer spending trends, although the bulk of the survey was carried out before the mid-September banking difficulties. The CIPS index for the services sector weakened edged lower to 56.7 in September from 57.6 the previous month.
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