Bank of England leave Interest Rates Unchanged at 0.75%

Yesterday was the big market event for this week’s trading. UK markets gave a sigh of relief following a few weeks of speculation that the Bank of England would cut interest rates. Prior to the results, analysts had predicted a 50/50 chance of a rate cut so traders waited in anticipation which resulted in only 2 of 7 committee members voting to cut interest rates, and so the official bank rate remains unchanged at 0.75% at least for the time being. The news didn’t move rates spectacularly either way, however, the Pound did strengthen around half a cent against the Euro and Dollar almost immediately after the announcement.

The report following the vote suggested that growth in global economy coupled with signs that the UK economy had gained some momentum following Decembers general election, and positive growth shown in surveys for both the Manufacturing and Services sectors meant there was no urgent need to provide further stimulus by cutting the rate. However, the bank was clear to say this would only be the case should a continuation of improvement in economic activity be maintained over the coming months. The official data results are due out in February and will give a more accurate representation of how the economy is fairing, so we are not of the dark just yet.

Today marks the official Brexit deadline day. This evening the UK will officially no longer be part of the EU however during the next 11 month transition period we will still practise the same rules. Now we face months of negotiation to secure a trade deal that suits both the UK and the EU before we cut ties for good at the end of the year.

The UK’s future still remains uncertain and with that exchange rates are likely to remain at current levels, so if you have an upcoming requirement to exchange foreign currency be sure to stay in touch with our friendly currency consultants to be kept up to date on current events and how they can impact your transfers.