Last week the Bank of England voted to keep interest rates on hold for the 4th consecutive time. Whilst this was expected in the lead up to the decision, we have seen a change in the voting patterns of the 9-voting members.
The rate will remain at 5.25% and the vote was a 6-3 split. Interestingly one member of the BoE’s Monetary Policy Committee voted for a cut so could this be the start of a change of approach and could this impact GBP exchange rates moving forward?
For some time now, the expectation from financial markets is that the between the Bank of England, European Central Bank and the Federal Reserve Bank in the US, it will be the BoE that will keep interest rates at elevated levels for the longest.
Between now and the end of the year, cuts of 0.75% is expected from the BoE whereas for the ECB and the FED the predictions are for in excess of 1%. Any deviations from these expectations carry the possibility of influencing the underlying currencies, so keep an eye out for any changes to the current outlook.
Inflation data along with the economic health of each economy will be important for this outlook, and the voting patterns from the Central Banks along with commentary and speeches from key personnel within Central Banks can also cause market reactions. For example, just yesterday evening in a pre-recorded speech US Fed Reserve Chairman Jerome Powell suggested that the markets are pricing in too many cuts from the Fed this year.
The US Dollar has strengthened off the back of these comments.
Economic data releases this week are light which will give the markets time to digest last week’s updates.
If you would like to discuss an upcoming currency transfer, exchange rates and timings do feel free to get in touch with me (Joe) directly on [email protected] and I will be happy to offer opinions along with competitive exchange rates.