Will the Bank of England raise interest rates?

Pound to Euro Under Pressure as BoE Consider Stimulus

Yesterday the pound gave up some of the more recent gains as Inflation data failed to rise taking some of the pressure off the Bank of England to raise interest rates in May. The Bank of England has been looking very closely at Inflation and Unemployment data to gauge the likelihood of further interest rate hikes in the future, yesterday’s news has seen the pound come in lower.

It is my belief that the pound could now really struggle to rise much higher although it is likely the Bank of England will hike interest rates in May. This is because Inflation does still remain high and to not raise rates could risk damaging the Bank’s credibility. The likelihood is that the Bank will be faced with challenges in the future which will take the pressure off the Bank of England to look at further longer-term hikes.

Growth in the UK has been very subdued and the outlook remains uncertain, the IMF has warned about the long-term potential negative effects from Brexit. The market is focused on the uncertainty which will be presented to the market from the lack of clarity over how exactly the UK’s relationship with the EU will look in the future.

I would suggest the current improvements are well worth taking advantage of as they are close to the best against many currencies since prior to the Referendum. Much of the good news is now priced into the pound and any signs of bad news could easily destabilise the current very favourable levels.

For more information on the future currency trends and achieving the very best rates of exchange, please speak to me Jonathan Watson by emailing jmw@currencies.co.uk.

Thank you for reading and I look forward to hearing from you.