BOE cause Sterling Spike (Daniel Johnson)

Is a rate hike by the BOE justified?

Sterling has strengthened against the majority of major currencies of late. The most significant catalyst has been the indication of a potential rate hike from the Bank of England (BOE). Mark Carney the governor of the BOE announced there is there may be call for  a rate hike in the coming months. I always take the words of central bankers with a pinch of salt, but on this occasion investors bit. It is now deemed there is a 50% chance of a rate hike by November and a rate hike has been factored in for before February next year.

The justification for the potential hike however is somewhat misleading. Inflation has been given as a positive for the UK economy, currently sitting at 2.9%, however inflation is only healthy for an economy if average wage growth is growing at a similar rate, it is not, average wage growth fell to 2.1%, something the BOE swept under the carpet.

Unemployment levels have also been cited a s reason behind a rate hike. With many believing the hype about the best figures for 42 yrs, let us not forget however that a significant amount of those employed now are on zero hour contacts.

Be wary of hoping for a continued rally for Sterling. I am of the opinion a rate hike is not a given, nor is it a solution to the UK’s woes. Clarity over Brexit is and with the key issues such as citizens’ rights, the exit bill and trade agreements yet to be addressed I would not have faith in large gains for Sterling.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker when the market is currently so hard to predict. If you let me know the details of your trade I will endeavor to produce a free trading strategy to suit your individual needs. Have faith knowing you will be dealing with a brokerage in business for over 16yrs, Foreign Currency Direct Plc. We are a no risk entity as we do not speculate on the market and we are registered with the FCA. If you have a currency provider take a minute to send over the rates they offer and I am confident I can demonstrate a significant saving.  I can be contacted at dcj@currencies.co.uk . (Daniel Johnson) Thank you for reading.