Yesterday the Bank of England (BOE) kept both Interest Rates and Quantitative Easing (QE) unchanged. This was the last meeting under Mervyn King who has been with the BOE for over 27 years, 10 years at in the top chair. However in the last 10 years Sterling has dropped in value over 27% – Scary. The Monetary Policy Committee, (MPC) that makes decisions on change has been split recently over whether to increase QE, in last month’s meeting three members voted for an increase out of the nine.
Next month Mark Carney takes the head and it’s rumoured that he will try and change economic focus from Consumer based to Export based. If this was confirmed many expect him to weaken Sterling through a negative tone or even more QE in an aim to make UK products and services more competitive, which is a concern for the longer term forecast of Sterling.
In General however recently UK economic data has shown quite a contrast; unemployment rising along with a fall in retail sales; however data from the construction, manufacturing and services sector have suggested an improvement. Next week we see more news from the Manufacturing sector which could continue sterling’s gains. The worry however is Tuesday when we see the Monthly as they discuss ways to create jobs and growth across the region. With a majority of countries contracting and even the “power house” Germany growing by a fraction at 0.1% many expect new policies to be announced with an effort to try and boost growth. This would make the euro more expensive to buy on the day.
I personally expect the pound’s fortunes to be fairly positive this month however I would suggest all to be wary of future policy change under Mark Carney. Rates however never move in a straight line so timing a trade will be incredibly important to get the most out of your trade. Our proactive service here is well placed to help, with the use of Forward Contracts, Limit Order, Stop Loss Orders, Rate Alerts and others there are many ways to manage your risk and exposure to the markets. PLUS with access to award winning exchange rates we are 100% sure we will be able to save you money. If we couldn’t we simply would not be in business. Please email me, Steve Eakins for more information at [email protected]