The Monetary Policy Committee, which consists of Bank of England Governor Mark Carney and 8 other policy makers, voted 7-2 in favour of keeping rates on hold, with Ian McCafferty and Michael Saunders voting for a rise in rates. UK Growth forecasts for 2018 were also revised downwards to 1.4% from 1.8% which had been predicted in February.
This downgrading of Growth forecasts was almost entirely put down to the Beast from the East disrupting so many areas of the UK economy in March, which caused the slowest Growth figures in 6 years and Inflation levels to fall to their lowest point in a year. However in the subsequent press conference Mark Carney stated that the ‘underlying pace of growth remains more resilient than the headline data suggests’.
This provided some confidence that this softening of the economy should only be a short term issue and is expected to bounce back in the months to come, and many economists are now predicting that the Bank will still raise Interest Rates this year, possibly towards the end of the year, with another hike in 2019 and another in 2020.
The Pound fell against all of its major currency counterparts yesterday following this announcement, however the losses were limited due to the more positive tone of Carney’s speech following this, and GBP/EUR found a foothold at just above the 1.13 mark.
This just goes to show how resilient the UK economy is at present, as even with Brexit looming, and Interest Rates continuously being left on hold, rates are still at very favourable levels for clients holding Sterling and are a far cry from the 1.07 lows seen last year.
This also suggests that clients looking to buy Sterling with another currency may benefit from doing so sooner rather than later, as any hopes of a weakening Pound are looking less likely.
The table below displays the market movements for a number of currency pairings in the last month:
|Currency Pair||% Change||Difference on £200,000|
Looking at data releases to impact Sterling exchange rates next week, on Tuesday at 9.30am Average Earnings for March will be announced and are taken into consideration by the Bank of England when determining future changes to monetary policy. This is followed by Inflation Report Hearings released at 11am. As these releases cover the March period of poor weather conditions, markets have likely priced in lower readings, however if they are released better than expected we could see GBP/EUR regain some of its losses.
Get in touch with us today to make sure you are in a position to capitalise on any spikes in your favour. You can call our team of currency brokers directly on +44 1494 725353.
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