It was then the MPC, and Carney in particular, who caused a stir yesterday in a speech at the IMF headquarters. He restated the MPC majority view that some withdrawal of stimulus is likely to be needed in the coming months but if the slack in the economy continues to be run down. His tone then turned unexpectedly dovish as he said that any rate hikes are expected to be gradual and limited. Sterling fell back below 1.35 and 1.13 against the dollar and Euro respectively before recovering again this morning.

On Europe, Carney also went on to add that the biggest influence on the UK's prosperity in the medium-term would be its new relationship with the EU. "Many of the adjustments needed to move to that new equilibrium are real in nature, and are not in the gift of monetary policymakers," he said. "But monetary policy can help build the foundations for lasting prosperity by achieving the inflation target in a way that helps smooth real adjustment in the economy and supports jobs in the wake of very large external forces."

Given the change in tone from the MPC, our house view now is that we expect a 25bp hike in November, followed by another hike in May 2018 before a further hike in August 2019 to take the UK base rate back to 1%. In line with this, our view on currencies has now changed and we forecast GBP/USD at 1.38 for year end, rising to 1.40 over 2018. Against the Euro, we expect the Pound to trade at 1.15 over 2018. Of course there are other factors such as Brexit related developments which will influence the level of sterling. However we maintain our long held view that in terms of valuation, the pound is fundamentally cheap and that its level already factors in a degree of turbulence from the process of leaving the EU.

Staying at home, Theresa May sought to reassert her position after a damaging article from Boris Johnson over the weekend in which he laid out his own Brexit vision. Senior Tories accused Johnson of being a “back seat” driver before May bit back and said there’s only one driver on Brexit ahead of a key cabinet meeting this week.

The day ahead

With little on the calendar today, all eyes will be on tomorrow’s key FOMC meeting.

Thought of the day

Could tennis be changing forever? The inaugural Next Gen Finals is only months away and it is set to be a “landmark moment” for the sport. November sees the top 8 players aged 21 or under play in Milan in a similar event to the famous end of year event at the O2. The rules have all changed: First to 4 games in each set, tiebreak at 3 games all in each set, no let cords, shot clock between points, public can move in the stands between points and more interestingly no line judges! The match will see hawk-eye technology call all lines with only one umpire present. This trial of all new rules paves the way for how innovation can be used in a real environment. Improvements can never be made without sometimes trailing something new and the ATP should be praised for the forward thinking. If you want to change the rules on your FX Hedging policy get in touch with your dealer to discuss different solutions by calling the Investec Dealing team on 0800 055 6339.