UK Interest Rates Remain on Hold
It was confirmed by the Bank of England (BoE) yesterday that they would be keeping interest rates on hold at the record low of 0.5% as expected. Despite two members of the BoE voting for a rate hike recently we have since heard from other members who have stated they do not believe a hike in interest rates is the right move at present and so now many analysts have started speculating that we may not see interest rates move from their current levels until towards the end of 2015. I personally think that if we see UK economic data continue to impress we may see rates push up in Spring next year and this could be the catalyst to provide more support for Sterling and could lead to exchange rates pushing up over the 1.30 level against the Euro and back to the mid 1.65’s against the USD. I also think that by the end of 2015 we may have seen more than 1 interest rate hike and if rates remain low in the Eurozone which they currently look like they will it may mean we see a strong year for the Pound.
UKIP Win By-Election
Last night it was confirmed that UKIP have won their first seat at Westminster as Douglas Carswell, the MP who recently defected from the Tories, won with a strong majority. In what may have been even bigger news UKIP came a close second in the Heywood and Middleton by-election to Labour, if they had won that it would have really sent shockwaves through the political landscape. It seems that UKIP are really gaining significant momentum and with the elections fast approaching the uncertainty over the UK political scene could result in some weakness for Sterling until that uncertainty is removed. Investors will usually look at the stability of an economies political scene and so until we know who will be the next government I think that in the lead up to the elections we could see a lot of volatility for the GBP.
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