The likelihood of a rise in UK interest rates dramatically increased on better than expected Gross Domestic Product (GDP) figures. Office for National Statistics figures show that in the 3 month quarter to September GDP rose by 0.4% - 0.1% up on the first two quarters. UK economist Ruth Gregory, of research company Capital Economics, said the figures 'have probably sealed the deal on an interest rate hike next week'.
The pound rose against the dollar and the euro by almost 0.3% after the publication of the figures on Wednesday.
The US dollar continues to be strong. It is supported by their own likely interest rate rise, as President Trump is widely expected to name Stanford University economist John Taylor as Federal Reserve Chairman. Taylor has consistently advocated rises in the US interest rate.
Growing confidence in the economic backdrop saw the gold price down by £2.61 per ounce on Wednesday morning trading in Asian markets. A trend that continued into UK markets throughout the day.
'Gold fell overnight, and continues to point south this morning as market appetite improves on better Wall Street prints amid stronger-than-expected corporate earnings results. Moreover, the strengthening dollar on news of rising probability for John Taylor to be the next Fed chair is a key driver for softening gold prices into the week ahead,' said Oversea-Chinese Banking Corporation analyst Barnabas Gan.
Now all focus will be on the outcome of the next Bank of England Monetary Policy Committee meeting on Thursday 2nd November. Will there or won’t there be a rise in UK interest rates?