Well, the European sovereign debt crisis continues, another day another downgrade. Moody’s are looking at a possible downgrade Portugal as well and Fitch doing the same with Greece moving it below investment grade. This news has further hurt the Euro and well as Sterling to a lesser extent and looks like it will remain under pressure in the run up to the Christmas break especially against the USD.
Yesterday saw some pretty poor data out in respect of the UK public finances with public debt borrowing at £22.774 billion up from £16.7 billion in November. Expectations were for it to remain around the £17bn level so not a great starting point for the coming austerity cuts.
Today we have the minutes out for the last Bank of England policy meeting. Although there was no change to policy, markets will be very interested in the conversations to any clue about member’s thoughts for the New Year. With Andrew Sentance calling for a rise in rates for quite a while now and with inflation constantly coming in higher than the 1-3% target range it is only a matter of time before others start agreeing that a rate rise could be the only way to bring inflation back under control. The likelihood of a rate rise in the near future will be good for the pound.
Today we also have the final revision for Q3 GDP figures in both the UK and the US and although markets do not expect any change from the last revision, we have seen a few surprises recently.