Pound slips as Bank of England put brakes on interest rate hike

Yesterday was a busy day in the market with big movements in the majors and across all Sterling pairings. The big news of the day came in the morning as the Bank of England Governor Mark Carney announced that UK interest rates are remain low for some time following poor retail sales and risks surrounding GDP figures. Given that in recent months much of the market had backed a spring hike, this saw the pound lose ground as the sparkle of a higher return for foreign investors dimmed. With lower than required UK inflation figures and external pressures from struggling emerging markets it was suggested that in fact the BoE may have to be prepared to cut rates – somewhat of a U-turn from recent sentiment.

Consequently in yesterday’s trading the pound lost a cent against the Euro (which was boosted by positive German business climate data in the morning) and the same against the Dollar which posted slightly better than expected GDP figures in the afternoon.

EUR/USD traded within a tight 40 pip range throughout the day, as it has done for the last 4 days ahead of the big announcements next month – the European Central Bank Quantitative Easing programme review, and the Federal Reserve announcement about US interest rates.

On the whole it was a bad day for the pound which lost ground across the board, notably losing 2 cents against AUD, NZD and CAD to name but a few. Today is a slightly quieter day in the way of data, with a focus on the UK as George Osborne sets out the government’s spending plans to 2020 with the release of the Autumn statement and spending review, and In the afternoon the U.S release of Durable goods orders data.

Don’t be surprised if we see the pound continue to slip following what now could see a change of sentiment in the short term.

Certainly yesterday’s announcement is bad news for those hoping that the pound would continue to make the gains we have seen in recent weeks.

With so much speculation surrounding the UK hike now pushed to the distance, and as people await the ECB and FED announcements next month, we could well have seen the best buying rates from GBP>EUR and USD passed.

So those of you holding out may like to try and catch the rate now before it slips further, particularly as the announcements next month could in fact see both the Euro and Dollar rates drop.

Speak to your Currency Index Broker today for some friendly and professional guidance on how to make the most out of your transfer.