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Bank of England likely to sit tight, Next weathering the storm

Next recently upgraded its full-year forecasts after a 3.8% rise in first-half sales

BoE governor Mark Carney
It's not known if Mark Carney wears Next suits

Thursday will see the Bank of England (BoE) make its last monetary policy announcement before the UK is due to leave the European Union on 31 October.

The central bank is widely expected to leave rates at 0.75% and the asset purchase programme at £435bn against a backdrop of Brexit uncertainty, weaker global growth and an ongoing trade dispute between the US and China.

Last month the Bank cut its growth forecast for this year and next and warned that Britain has a one in three chance of plunging into a recession after Brexit.

On its outlook for interest rates, the BoE said if the UK leaves the EU with a deal in place it “would be appropriate” to raise interest rates to prevent the economy from overheating.

But ahead of the August meeting, Governor Mark Carney warned of a “sea change” as a concern among investors about the global economy, mainly due to US trade policies.

“The MPC retained a much more hawkish tone at its last meeting than we had anticipated,” said RBC Capital Markets.

“Certainly, the ‘sea change’ that Governor Carney had spoken about just a few weeks prior to the meeting was nowhere to be seen in either the minutes of the Committee’s deliberations or the post-meeting press conference.

“This month’s meeting is likely to see more of the same; despite the worse-than-expected second-quarter gross domestic product outturn of -0.2% quarter-on-quarter, the strength of the labour market, and wage growth in particular, which is now touching 4% in the three months to July, will allow the Monetary Policy Committee to remain on hold for the time being.”

Next looks to hold firm amid retail slump

Despite the ongoing downturn in the retail sector, Next PLC (LON:NXT) seems to be weathering the storm having recently upgraded its full-year forecasts in a trading update that revealed a 3.8% rise in sales for the first half

The FTSE 100 clothing firm's online business is serving as an important driver for growth and for offsetting a decline across the company’s retail stores. Investors will, therefore, be hoping that when the firm reports its interims on Thursday the online division has achieved its growth target of 11% that was set at the start of the year.

There will also be some interest in whether nextpay, the company’s pay later solution, has seen a rise in customers struggling with repayments as fears of an economic slowdown continue to loom in the background.

IG to benefit from increased volatility

Spread-betting and CFD provider IG Group should provide a first-quarter update alongside its annual shareholder meeting.

Compared to earlier in the year there has have been more market volatility, but lower than this time last year, but that the first quarter last year was only partly affected by new product regulations from the European Securities and Markets Authority.

Net trading revenue should come out at around £119mln, forecast broker Peel Hunt, better than the previous quarter, out of a predicted circa £505mln, which is circa 6% up year on year.

"Of interest will be progress on the initiatives that return IG to growth in FY20," analysts said. "These include the launch of the new multilateral trading facility in September and the drive to on-board clients in both core and significant markets."

Thursday September 19:

Finals: Bluefield Solar Income Fund PLC (LON:BSIF), Clinigen Group PLC (LON:CLIN), Wilmington PLc (LON:WIL)

Interims: Allied Minds PLC (LON:ALM), Cambridge Cognition Holdings PLC (LON:COG), Distribution Finance Capital Holdings PLC (LON:DFCH), Hvivo PLC (LON:HVO), Next PLC (LON:NXT), City Pub Group PLC (LON:CPC), Xeros Technology Group PLC (LON:XSG)

Trading statement: IG Group Holdings PLC (LON:IGG)

FTSE 100 ex-dividends: Rio Tinto plc (LON:RIO)

Economic announcementsBank of England rate decision

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