Commentator Matt Brown previews the Bank of England monetary policy meeting, and thinks the vote will be 7-2 to keep UK interest rates on hold once again, with the two new MPC members “unlikely to want to rock the boat.”
He says the key thing is that, despite UK inflation bumping up near to the Bank’s 3% target, earnings growth isn’t there for the BoE to start think of raising rates, as wages are lagging significantly.
But while he doesn’t believe there will be any surprises at midday today, there could still be a more hawkish stance to the meeting minutes published at the same time.
The FTSE One to Watch is Next Plc (LON:NXT) , with the stock strong today after the clothing retailer raised its guidance, indicating that it won’t be as bad a year as it could be, and Brown points out that while in-store sales were down 7% to 8%, it is all about online development and strategy.
He notes that the FTSE 100-listed group is looking at closing underperforming stores, while those that are performing well, Next is looking at having concessions in, such as Prosecco bars for a drink after you’ve gone in to buy your pants and socks, which may boost footfall.
On the small cap front, Brown highlights Venture Life PLC (LON:VLG), a “pharma company involved in lotion and potions for skin, hair and nails”, which has a strong portfolio and is doing well in Europe, with a shift up in male interest in cosmetics.
The commentator also notes yesterday’s broker downgrade by Macquarie for ITV plc (LON:ITV), with the Aussie broker almost halving its target price to 110p from 200p as it thinks even if the long-mooted takeover bid from significant shareholder Liberty Global happens, it will only be at around the 125p a share level.
And with currencies, the commentator highlights a “very difficult pairs trade” between sterling/dollar and sterling/euro , particularly with the BoE decision likely to be key as it may disappoint the bulls after the boost from Tuesday’s above-forecast inflation data.
But Brown also tells investors not to forget about the big US CPI inflation data, due out today, which may have an impact on the dollar.