Bank of England give mixed signals for Pound

Exchange rates took a little turn for the better yesterday, after the Bank of England’s Monetary Policy Committee revealed that two of its members voted for an interest rate rise earlier this month.

Mark Carney, the Bank’s Governor, said last week that interest rates were unlikely to go up in the coming months, which pushed the Pound lower – but there has clearly been internal discussion about earlier rate rises, with Ian McCafferty and Martin Weale both voting for a 0.25% rise this month.

Once 5 of the 9 members vote for a rate rise, the move would happen, and the Pound is extremely reactive to interest rates, with a rate hike likely to give us sterling strength and improve exchange rates. Once of the reasons the Pound has fallen back was Mr Carney’s comments last week, which seem to contradict some of his committee’s opinions. We saw the Pound gain around 0.5c against the Euro and US Dollar amongst others yesterday morning.

Lower inflation this week meanwhile also reduced pressure on the Bank to raise rates – so overall we have some very mixed signals coming out of the City which do not help those of you sending money abroad working out when to buy your currency. Rates have already fallen back this morning however, so we don’t expect yesterday’s minutes to be much more than a short term spike up for rates for now.

Today we have UK retail sales figures released at 9.30 am, as the day’s only major data, as well as Eurozone consumer confidence this afternoon. For the latest developments contact Currency Index, your specialist currency broker, for a free quote and discussion around your own transfer.