Attention turns to US rate decision

All eyes this week are on the US Federal Reserve as it prepares for an interest rate decision on Thursday, widely expected to be at least a rise of a quarter point to 5.25 per cent.

This morning the dollar was trading at 0.7951 to the euro and at 0.5483 to the pound.

The key question in the money markets is on how far the Federal Reserve will go and by just how much the rate will rise.

The rate rise will be accompanied by a statement which is expected to show that US first-quarter growth is should be revised up to 5.6 per cent (annualised) from 5.3 per cent.

Thursday also sees a trading update from the world's largest drinks maker, Diageo.

In February the group posted increased profits of seven per cent and it is expected that similar performance will be announced later in the week.

Barclays analyst David Liston told the Western Mail: "Over the past few months, Diageo has continued to outperform the US spirits market, with strong performances from most of its leading brands, which have achieved double-digit revenue growth.

"For the most part, international markets have been strong and we expect double-digit growth to have been sustained throughout the year in its international division."

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