This Thursday will be an important day on the GBP calendar as it will mark the date of the Bank of England’s interest rate decision. After a week of gains for GBP, the upcoming rate cut may not be as likely as it once was. Before the UK’s successful UK labour market data, the chance of a rate cut was sitting above 60%. This came after dovish statements from the BoE and poor performing UK economic data. The pound has gained on the euro in the past week and continues to fare well against the currency. The bets for a rate cut haven’t completely been called off however, and an unexpected rate cut could see the GBP drop, allowing the euro to edge up.
What Are the Chances of an Interest Rate Cut From the Bank of England?
As it stands, the Bank of England will be looking to fend off an interest rate cut from the Bank of England this Thursday. Recent positive performance from the UK’S economic data has seen sterling edge over many of its major rivals in the global market. This had boosted confidence in the GBP and late last week the value of the pound hit 1.1901 against the euro, before slipping to 1.18611 at the end of last weeks trading. Previous bets of a rate cut from the BoE stood at above 60% but the recent success has seen these numbers topple. This has been one of the main reasons that GBP has performed well on a global level.
What is the BoE’s interest Rate and How Could it Change?
The BoE’s current interest rate stands at 0.75%. Predictions suggest that the BoE may not change this figure after this week’s positive jobs data which saw record numbers of employment levels and better confidence in services and industry in the UK. However, if there was to be an unexpected interest rate cut this Thursday, sterling would almost certainly lose the gains experienced over the course of the past week, giving opportunity to rival currencies like the euro to edge up in value against sterling.
How Does the GBP Fare Against the Euro?
The GBP was one of the week’s best performers on the global market. The recent gains off the back of the positive jobs data release have seen the GBP soar and rise against the euro. However, the euro is not scraping the bottom of the barrel itself, as it too saw success in its recent economic data releases. The figures showed a turnaround in the Eurozone economy, particularly in the German economy. Should the BoE decide in favour of an interest rate cut, the euro would likely edge over the GBP and continue its economic rebound. But if the BoE holds steady, sterling could rally as fears of a cut will be subdued and investors will likely flock to the currency.
The week ahead could be key for sterling with two key news and economic events at the end of the week. If you have an upcoming currency transfer you may wish too get in touch to discuss the news and the markets further using the form below. I look forward to hearing from you.