Olympic boost for UK fails to lift Pound

Great GB news yesterday with the UK winning the bid for the 2012 Olympics!

The FTSE 100 rose to a 3 year high at 5229.6 boosted by investment in engineering and building sectors. The feel good factor has failed to hit the fx markets however with cable (£/$) reaching new lows overnight to 1.7467.

Today is Interest Rate Day with announcements both from the UK and the Eurozone. Whilst we are certainly not expecting a cut by the latter, the market will look to any change in stance via associated comments from the current position of rates being “exactly appropriate”.

There are a few vocal commentators out there arguing for a 25bp cut by the MPC today. It is suggested that the likelihood is 30% at most, so the market will react should they go for it at noon today. Whilst the knee jerk could be to sell the mighty pound, it may be that a pre-emptive cut will be looked at in a favourable light medium term as economists decide that this will ensure that interest rates will not have to fall so far.

Halifax announced its monthly housing date this morning: house price inflation slowed to its lowest level for more than four years (March 01) and down 0.1% on the month though the number of purchases increased month on month.

No other data of note out today – 12pm MPC and 12.30pm ECB announcements key. G8 kicks off this morning no doubt with Blair nursing a sore head from celebrating all night and Chirac – well just with a sore head!