Bank of England Chatter Pounds £

Thursday, August 3:  FTSE indices at large started the day lower, before the midday announcement from the Bank of England weakened sterling and induced overseas investors into UK equities. The FTSE 100 was held up with some rare positive retail news in the form of Next, and an array of other stocks.

Next (+7.61%)traded higher after reporting a 0.7% increase in Q2 sales aided by a strong performance online, prompting an upgrade to guidance. The company now expects full-price sales in the year ending January to be between 3% lower and 0.5% higher than the previous year, compared with previous expectations of 3.5% lower and 0.5% higher. Profit guidance remains unchanged due to weaker sales performance offsetting full price sales.

Randgold Resources(+3.45%) delivered a Q2 performance which management said gave it confidence of achieving full year targets, reporting higher output, lower operating costs and improved profit. The FTSE 100 miner noted the improved performance more than doubled cash to $572.8m, with net cashflow in H1 rising to $265.5m, from $197.2m the year before. First-half gold sales worth $400.2m were reported, edging up from $392.8m as average gold prices were marginally higher on average at $1,237 per ounce compared to $1,224 per ounce the year before.

GBP/USD found itself at a 10.5 month high following improving data for the UK services sector. The PMI number for April came in at 53.8 for last month, just shy of the 53.9 expected from a consensus of economists. June’s figure of 53.4 was improved upon, but hopes of a stronger performance from the service sector in H2 are ebbing away given only marginally faster growth, a muted level of new orders and subdued business confidence.

Sterling strength proved to be short lived as the Bank of England passed comment on the UK economy, and the committee voted 6-2 to hold rates at the current 0.25%. However, the committee did note that it anticipates raising rates in the UK at a faster pace than investors currently expected.

Across Europe, indices were mixed at the close with the FTSE 100 +0.85%, the DAX 30 -0.22% and the CAC 40 +0.46%.

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