Stocks look set to make their way slightly lower early on today, having jumped to a 14-year high during yesterday's session.
City sources predict the FTSE 100 will open around five points below yesterday's close of 6,873.08.
The dip is expected despite both the S&P 500
and the Dow Jones both hitting new record highs last night, which, as Michael Hewson from CMC Markets explained, was driven by the "continued belief that the ECB would act to ease monetary policy next month after a disappointing German ZEW expectations survey and a further decline in Italian inflation data".
Turning to today, he continued: "Away from Europe it is the UK economy that is expected to be the centre of attention with the latest Bank of England (BoE) quarterly inflation report. Since the last report the UK economy has outperformed expectations, which is likely to present the central bank with some problems with respect to its guidance on the future path of interest rates.
"The Governor could well be expected to face some difficult questions on whether the bank is concerned about the pace of house price inflation, particularly outside of the London area, and what measures, if any, they intend to use to keep them in check."
The BoE has vowed to keep interest rates at a record low of 0.5% for an extended period, but fears of a housing bubble have raised questions on whether the bank will move sooner to lift rates.
In Hewson's view, it would be unsurprising if we begin to see some differing views on rate policy going forward.
Ahead of the interest rate report, which will be delivered by BoE Governor Mark Carney at a news conference at 10:30, data is expected to show the unemployment rate fell again to 6.8% in the three months to March from 6.9% in the preceding three months.
Employers during the period are projected to have added 248,000 new jobs, compared to 239,000 the previous quarter.
"Jobs data out of the UK continues to do well and has even led the Bank of England to drop its informal unemployment targets over the last few months. This leaves market participants eyeing inflation data out of the UK for any hints in regards to rate increases, but the relatively soft data may not be enough to continue to press multi-year highs for much longer," said Christopher Vecchio, Currency Analyst at DailyFX.
"Although data has been some of the best in the west over the last few months, housing prices have contributed a large degree to higher inflation. Unless we do see a pickup in wage growth, it likely that any higher inflation will have to be on higher home prices."
Meanwhile, in this morning's company news, paper and packaging group Mondi delivered a 13% increase in underlying operating profits in the first quarter despite a "mixed" trading environment and flat sales. Underlying operating profits totalled €183m in the three months to March 31st, up from €162m the year before and 14% ahead of €161m reported in the fourth quarter of 2013.
Interdealer broker Icap reported a decline in full-year revenue, against a backdrop of challenging market conditions, which included regulatory changes, bank deleveraging, muted interest rates, the Libor investigation and foreign exchange
rate volatility. "Trading conditions have been and are likely to remain extremely difficult," the group said as it reported revenue of £1.4bn, down 5% from the previous year. Trading profit before tax fell 4% to £272m, in-line with previous guidance. It maintained its final dividend payment at 15.4p per share.
Advertising revenues at television network ITV were in line with expectations in the first quarter, with the second quarter looking to beat expectations thanks to a spike in World Cup-related ads. Net advertising revenues (NAR) were up 2% in the first three months of the year and since then jumped 19% in April, towards the top end of expectations, with forecasts for 7% growth in May, between 12-15% in June and positive in July. On the downside, the ITV 'Family' of free-to-air channels suffered a lower share of viewing in the period than had been expected.
British Land's annual underlying pre-tax profit rose 8.4% to £297m on the back of strong demand for London property. Net asset value per share increased 15.4% to 688p with total net assets at £7.1bn, up from £5.7bn a year earlier.
On the second tier, Ultra Electronics revealed it has received US regulatory approval for the acquisition of Forensic Technology WAI, for which it paid 94m Canadian dollars, plus an additional 6m depending on earnings growth during the next two years. The transaction is now complete.