Bank of England Split on Interest Rate Decision – GBP Exchange Rates

This morning the latest set of Bank of England minutes have been released and have shown that the vote was not a unanimous 9-0 vote as most had predicted and instead showed the members of the Bank of England’s Monetary Policy Committee (MPC) were split in their decision for the first time in a long time with 2 members voting for a rate hike. It was Martin Weale and Ian McCafferty who voted for a rate hike and it meant that this is the first time since 2011 that the MPC have been split so surely this is a clear sign that UK interest rates could be going up sooner rather than later.

Interest rates have been at the record low level of 0.5% since March 2009 and the speculation has been building that the MPC will hike interest rates soon with some analysts forecasting a rise before the end of the year. This has had, and is likely to continue to have, a big impact on Sterling exchange rates as high interest rates mean a bigger return for investors therefore increasing the demand for that currency. So, should interest rates go up in the UK there will be an increase in demand for Sterling which as a result pushes up the price of the Pound. This effectively means an interest rate hike means Sterling strength and we have seen this morning that just the prospect of an interest rate increase can give Sterling a boost as we have seen Sterling exchange rates gain over half a cent immediately after the announcement. Currently Sterling exchange rates are very strong against most of the major currencies with this morning’s news has only gone to help that which is good news for all those clients looking to transfer money internationally.

If you would like to discuss the implications of this morning’s announcement from the Bank of England on your currency requirements and the options available to you please 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