Interest Rates Held

Yesterday the focus was very much on the Bank of England and the decision of whether or not the interest rates will rise at all. With the result – a unanimous vote to keep interest rates as they are and avoid a rate hike as widely expected. The result saw GBP lose immediate ground to USD – almost losing 0.4% within the first half our of the announcement. The inflation forecast for 2017 increased to 2.7% from the previous 2.4% – however the growth forecast for 2017 has been marginally downgraded to 1.9% from 2%. This was due to slow income growth and rising inflation. Against the Euro it was the same result, EUR gaining against the GBP, however the gains were smaller at 0.2% still keeping levels at a good buying level. GBP lost ground on CAD and AUD too with the news, as it went spiralling down and lost almost half a cent against both further demonstrating the volatility of the markets.

Yesterday also saw manufacturing production figures released down 0.6% – 0.4% worse to predicted figures further adding to Sterling’s woes. With basic metals and metal products the largest contributors to the worse than expected figures.

Today there are no data releases in the UK so the focus is on Euro and USD. With both having clawed back some ground on GBP yesterday today could be a day to consolidate on those. Positive data results from both major pairings could see rates slump further before the weekend so don’t get caught up if you have any immediate requirements. With attentions now firmly on the elections in under a month and both Corbyn and May heavily involved the markets are expected to be very volatile. Stay in touch with your Currency Index account manager to discuss your best options.