Pound Fluctuates Before BoE Decision
With all UK PMI figures this week showing retraction in their sector, the Pound has struggled to make any ground against the Euro or US Dollar. The British economy had shrunk at its fastest rate since the financial crisis after last month’s Brexit vote, making many market experts expecting the Bank of England’s rate cut decision to be a “foregone conclusion”.
It is widely expected that the Bank of England will cut the official bank rate of 0.50% by 0.25% this afternoon. This would be the first time the interest rate would have been cut since 2009. Swap Prices have indicated the probability of a cut at 98%.
What does this mean for the Pound?
It is widely expected that the BoE will either cut interest rates, increase their QE stimulus, or both. As mentioned previously, I think that it’s very likely that they will cut interest rates by 0.25%. However, this looks like it has already been factored into the markets. This could be a slippery slope for the Bank of England and we could see further cuts later on in the year. Some members of the BoE have hinted that we could see negative interest rates.
If the decision goes the way we think it will, I’m not expecting the rates to dramatically move. Any deviation from this could see the Pound react accordingly. If they decide not only to cut interest rates but implement some form of stimulus, we could see the Pound weaken.
Below are GBP-EUR and GBP-USD movements in the last 24 hours.
What does this mean to you?
When looking to purchase an overseas property the exchange rates can play a huge part in what you can afford to buy. To put this week’s movements into monetary terms, the difference between the high and the low on a €200,000 property purchase is just under £2000. As you can see it’s imperative to keep in touch with an account manager at Foremost Currency Group. We can act as your eyes and ears on the currency markets and not only can we source a rate of exchange that can be up to 5% better than your bank but also help you with the timing of your trade and therefore make the most of your currency transaction. Get in contact on the details below for a no obligation discussion with one of our expert currency brokers.
A relatively quiet day for eco stats with only retails PMI for Europe and Unemployment claims for the U.S.
All Eyes will be on the UK with the aforementioned BOE inflation report followed by the MPC official bank rate vote and bank rate decision. Any deviation from the expected could make for choppy trading.