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as soft Chinese PMI numbers added to the gloom, while S&P 500, Dow and Nasdaq futures were down 0.1 per cent-0.2 per cent again.

Taking centre stage next will be the Bank of England. The market is fully priced for a rate hike of 75 basis points to its highest since late 2008 at 3.0 per cent.

Stuart Edwards, a fund Manager at Invesco said: “I’m sure that (BOE) governor Bailey will also reiterate the MPC’s commitment to fighting inflation.”

Report

His greater interest though will be on the Bank’s Monetary Policy Report that will include new CPI and GDP forecasts and show how rapidly the BOE sees Europe’s second largest economy weakening.

“That may not influence the immediate path of rates,” Edwards said. “But it could impact where this hiking cycle tops out. That’s important for bond investors.”

A gloomy outlook could put more pressure on the pound, which tumbled to US$1.1258 in London after retreating from a top of US$1.1564 overnight.

Two-year UK gilt yields also popped back over three per cent. US treasury yields were nearly at 4.7 per cent as the curve ‘bear flattened’, with the spread to 10-year notes near its most inverted since the turn of the century.

After the BOE, attention will move to the US ISM survey of services later yesterday and today’s payrolls report where any upside surprise will likely reinforce the Fed’s hawkish outlook.

The Dollar was broadly bid following Powell’s hawkish take, and found fresh momentum in Europe leaving the dollar index at 112.860 after an overnight bounce from a 110.400 low.