Old Lady prepares to sing

Photo finish

A careful examination of Wednesday's price action would show the Norwegian krone and the South African rand as the winners, by a nose. From a practical point of view, though, only a dozen or so ticks separated sterling, the US dollar, the euro, the yen, the Scandinavian crowns and the rand.

In other words, investors felt no burning desire for any of them. Nor were they particularly disenchanted with the laggards: the gaps separating the Swiss franc and the antipodean dollars were just as narrow as those between the leaders. The Canadian dollar was in the middle of the bunch, down by -0.2% against the pound having put in an average performance.

Sterling was arguably lucky not to have felt the negative effect of a disappointing purchasing managers' index from the UK construction sector. The reading was down by three points at 51.9, still in the growth zone above 50 but far from sparkling and two and a half points below forecast. The pound did hesitate at the time but the number was not bad enough to do any lasting damage.

Caution at the Fed

Loretta Mester, the president of the Cleveland Federal Reserve, John Williams, her opposite number in San Francisco and James Bullard from St Louis made appearances on Wednesday. All three took a cautious line on the continued upward march of interest rates.

Mr Bullard said there should be "a pause… for now". Mr Williams was more interested in the Fed getting cracking with a wind-down of its Treasury bond holdings. Ms Mester said that regular rate increases remain necessary to deal with upward pressure on underlying inflation. The problem is that none of the three is currently a voting member of the Federal Open Market Committee. Their opinions are therefore interesting but have no direct impact on US monetary policy.

Ecostats were few and far between on Wednesday. Swiss retail sales rose healthily in June: Australia's trade surplus narrowed as imports went up and exports fell.

Binary risk

Investors are awaiting today's developments at the Bank of England with eager interest. At midday the rate announcement will be accompanied by the vote count that led to that decision, and the minutes of the meeting. Half an hour later comes the quarterly Inflation Report and the governor's Q&A.

The expectation is that Bank Rate will remain unchanged at 0.25%, an outcome favoured by six of the eight Monetary Policy Committee members. The wild card is the governor's presentation of the Inflation Report, which may or may not support the idea of higher rates before the end of the year.

If the talk is of muted inflation expectations and downward pressure on the economy the pound would be likely to come under downward pressure of its own. If Mark Carney takes a hawkish stance and speaks of a need for normalisation of policy the pound should benefit. The most unlikely scenario is that it goes nowhere at all.