Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 called to open +50pts at 6720, with a bounce off 5-day rising support helping deliver an overnight recovery from yesterday’s slightly negative close. Back above 6700, Bulls are excited ahead of today’s BoE policy update. The sight of fresh post-Brexit highs also keeps alive the chance that two bullish patterns (3-week bullish flag, 11-month bullish inverse H&S) complete around last year’s 7100 all-time highs. The Bears need a breach of yesterday’s 6640 lows to put paid to the uptrend of the last week.  Watch levels: Bullish 6730, Bearish 6690.

A positive open is anticipated with markets pricing in a rate cut from the Bank of England, effectively opening the global central bank stimulus taps a touch more to maintain that post-crises accommodative stance investors have become so attached to. However, an overnight bounce and rally by GBP/USD does beg the question (and indeed ours) whether Carney will in fact hold off for a few weeks now that UK political uncertainty has been quelled. Well apart from Boris as new Foreign Secretary that is.

Asian bourses are higher again, albeit with a cautious tone, ahead of the BoE, and helped by a weaker Yen. Note also Australia’s ASX is supported by decent unemployment data and another rise in consumer inflation expectations that could fend that RBA from further cuts. A weaker oil price nonetheless seeing the latter and its Energy components underperform offsetting buoyancy in the commodity space - bar the precious metals of course.

US bourses ended yesterday’s session flat, with futures pushing north once more this morning as the Dow and S&P continue to flirt with all-time record highs. Note a 3-week bearish rising wedge pattern on the S&P500 makes things look a little toppy there.

The Fed’s Beige Book indicated net moderate economic expansion across the US. Post-close we heard from Philadelphia Fed Governor Harker who said he now / still / once again expects 2 rate hikes this year and a 3% interest rate by end-2018. He then said he wouldn’t comment on a July hike and then spouted a load more stuff about a ‘slow and steady’ approach, and all that other stuff they always say.

Crude prices have recovered some lost ground after yesterday’s sell off, which came as a result of EIA stockpiles data posting the biggest build in distillates (not crude) for 6 months, and a spike in production. Note Gold on the back foot with equity markets heading north ahead of the European open. Currently testing a rising trend line with bears targeting $1327, $1320 and $1312. If the BoE holds off however......

In focus today will be the Bank of England (BoE) at midday and the policy easing that markets are expecting. There are no guarantees as we have discussed - Carney may well wait until August - but markets are very much pricing in a 0.25% interest rate cut. They also hope for further QE and/or further stimulus measures to cushion a widely expected negative economic impact from the Brexit vote.

Thereafter it’s back to the US where we get an update on Producer Price inflation (PPI), the headline figure seen remaining deflationary (-0.1%) on an annual basis and the core print giving up some ground to just 1.0%. Still well below the Fed’s US inflation target of 2.0%, albeit more consumer inflation-focused.

Speakers of note today include BoE Governor Carney of course, whose words of wisdom will be analysed in great detail for clues about the outlook for UK monetary policy and what it might do to GBP. More stimulus on the way? Around the UK close the US Fed’s Lockhart and George have a chance to air their latest views on the outlook for policy on the other side of the pond.

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• Mothercare says not seen any immediate consumer reaction to Brexit vote
• Uk Mail says Q1 performance in line with its previous expectations
• Workspace Q1 total rent roll up 4.9%
• Experian sees mid-single-digit FY organic revenue growth,
• Experian sees no significant adverse impact to trading in UK business from Brexit
• Ashmore Q4 assets under management rise $1.3bn to $52.6bn
• Hays sees FY operating profit ahead of market expectations
• Supergroup to pay special dividend after adjusted profit rise
• International Public Partnerships raises 125 mln stg via placing
• Moneysupermarket.com sees 6% rise in H1 operating profit
• Halfords flags possible further currency hit
• 3i Infrastructure to invest in renewable energy firm Valorem
• BTG trading in line, guides revenue to £510-£540m on FX
• BHP says unlikely to restart Samarco operations in Brazil this year