Interest Rates To Stay Low For A “Very Long Time” – GBP Exchange Rates

In an interview on BBC Breakfast this morning David Miles, on of theĀ 9 members of the Bank of England’s (BoE) Monetary Policy Committee (MPC) has stated that interest rates are unlikley to return to pre financial crisis levels of 5% for a very long time and that the MPC are not in any hurry to raise interest rates as there is a lot of slack in the economy. However, in the same interview Mr Miles stated that it was unhealthy to have interest rates at such a low level as it is an indicator that the economy is weak. While this interview doesn’t give a clear indication either way as to whether the MPC will be raising interest rates soon or not but it does show they have a difficult decision as to when they need to raise them and that it is being discussed. The expectation is still that interest rates are to be hiked in Spring next year but should the UK economy continue to show signs of improvement there is still a chance that rates could be risen earlier, even as early as this year. As interest rates are one of the largest influencers on exchange rates any talk of interest rate hikes can provide strength to the economy so with speculation about a possible interest rate hike rising it may mean we see Sterling get a little stronger. This could mean we will see some excellent opportunities to buy foreign currency.

Today the key economic data release is UK Gross Domestic Product (GDP) which is announced at 9:30am and will be a revision of the quarter 4 figures from last year which are expected to remain at 0.7%. Should we see any upward revision of this figure though it could spark Sterling strength, however the opposite is also true. Either way this morning’s annoucement is key as it will give a good indication as to the performance of the UK economy and so could have a large impact on GBP exchange rates. If you would like to find out what the GDP figures are this morning call us and one of our senior currency brokers will be more than happy to help give you the latest news and explain how it may effect your currency requirements. You can call straight through to our trading floor for free on 0800 328 5884 or if calling from abroad call us on 0044 1494 725353 alternatively you can email me directly on