Bank of England hints at advanced interest rates cuts
13 January, 2020
Since the turn of the year rates have remained fairly flat as we await the UK’S official exit from the EU on the 31st January and enter into the transition period through to the end of the year. Although the future of Brexit remains unclear, what is clear is that the currency markets should expect further volatility as markets react off any new developments. But how soon will it begin? Well, It seems Boris’s withdrawal bill has been priced into current levels, meaning the chances of a spike in Sterling strength come the end of the month isn’t that probable.
The prospect of the withdrawal agreement passing gave Sterling a boost which was so desperately needed, however rates have dropped off and current levels may not seem so appealing to Sterling sellers. But if you take a step back and look at the bigger picture, current rates are only a couple of cents shy from the best rates seen in 2 years against the Euro, and in 1 year against the Dollar. With another year of uncertainty ahead with no firm Brexit deal in place, these current levels could well be the highest we see for some time.
Markets are also now more vulnerable to changes in economic data. The Bank of England only last week hinted at the possibility of advanced interest rates cuts should there be any further economic weakness in the UK, so investors will be watching closely as the UK posts some key data in the week ahead. Todays GBP result is expected to remain at 0% with no change, however any negative result here could damage the Pounds position, so if you have an upcoming transfer to make, be sure to stay in touch with your currency consultant here at CI and make a note of the key releases which could affect your currency transfers in the week ahead.
The week ahead:
09:30 GBP Manufacturing and Industrial Production, GDP.
15:30 CAD Bank of Canada Business Outlook Survey Report
13:30 USD Consumer Price Index
09:30 GBP Consumer, Producer and Retail Price Index
10:00 EUR Industrial Production
13:30 USD Producer Price Index
12:30 EUR ECB Monetary Policy Meeting
13:30 USD Retail Sales and Initial Jobless Claims
09:30 GBP Retail Sales
10:00 EUR Consumer Price Index
13:30 USD Building permits and Housing Starts data
14:15 USD Industrial Production
15:00 USD Consumer Sentiment Index
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