FTSE 100 moved up as pound dipped prior to Bank of England’s latest decision on interest rates
U.K. stocks moved higher Thursday, as pound dipped prior to Bank of England’s latest rate verdict, as the key London index continued to recover from a selloff prompted by trade tensions earlier in the week. Bank of England Governor Mark Carney and his colleagues will issue a monetary policy decision Thursday.
The FTSE 100 index UKX, +0.03% moved 0.4% higher at 7,657.48. The health care and consumer goods sectors topped the advancers, while the oil and gas group flipped slightly lower. The blue-chip benchmark on Wednesday gained 0.3%.
The pound GBPUSD, -0.5162% fell to $1.3138, from $1.3173 late Wednesday in New York. In the fixed-income market, the 10-year gilt yield TMBMKGB-10Y, -1.29% added 1 basis point to reach 1.30%. Yields rise when prices fall.
Stocks were still showing signs of recovery from their slide on Tuesday. Meanwhile, escalating trade fight between China and the U.S. – the world’s two largest economies – rattled global equities.
Attention is now turning to the Bank of England, which will release its latest monetary policy decision. The central bank is expected to hold its key interest rate at 0.5%. It has been at that level since November, when policy makers lifted the rate for the first time in a decade.
Ahead of the BOE statement, the pound is trading around lows last seen in November. Pound weakness can beef up revenue made overseas by multinational companies, which, in turn, can lift share prices.
Sterling got a modest lift Wednesday, after a key Brexit vote in parliament that was seen as a victory for U.K. Prime Minister Theresa May. Lawmakers in the House of Commons on Wednesday voted against a House of Lords amendment to the EU Withdrawal Bill that would have given parliament a “meaningful vote”, or more say, on the final divorce agreement.
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