With politics likely to hit the headlines over the next week, today is all about the Bank of England's interest rate decision, where the expectation is for a rate hike. The table below shows the market movements for a number of currency pairings just yesterday and illustrates the importance of timing your currency exchange:

Currency Pair% ChangeDifference on £200,000
GBPEUR0.6%€1400
GBPUSD0.55%$1460
GBPAUD0.9%$3060

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When will the Bank of England raise rates?

GBP Ahead of Bank of England Rate Decision

The Bank of England meet today for one of the most eagerly awaited interest rate decisions in recent times but it could be a very close call as to whether the central bank hikes or not. If it does then this will be the first time there has been a rate hike in a decade. The Pound has rallied dramatically in recent weeks on the expectation that the Bank of England will raise interest rates later today or very early in the New Year. The question for the Bank of England is whether or not they want to start tackling inflation now or risk waiting another few months before giving the medicine of higher interest rates. For the moment there is an excellent window of opportunity for those clients looking to buy Euros after excellent gains seen this week.

Those clients looking to sell Euros or Dollars who have been disappointed with the recent surge in the price of sterling could see a reverse in the rates should there be no change. Clients who find themselves in this situation would be wise to get in touch to prepare for such eventualities.

With two known doves on the Monetary Policy Committee then this meeting could prove heated and the vote split may be closer than the markets expect. Both the Deputy Governor of the Bank of England Dave Ramsden and policy maker Silvana Tenreyro have both cited weak wage growth as the main reason to keep rates at record lows. Data last month showed that real wages are still shrinking and this likely to see these two doves vote for no change today.

It is worth highlighting that at the last meeting there were only two members that actually voted for a rate hike. As such there will need to be another three members to take the plunge for a hike to occur. However the vote goes, the accompanying minutes will offer clues as to the central banks thought process and should create new direction for the Pound. Governor Mark Carney will also be speaking at 12:30.

GBP Strength after UK Manufacturing Data

The Pound has been boosted further after stronger UK manufacturing numbers for October arrived better than expected with a figure of 56.3 highlighting expansion. The sector has now shown growth for the last 15 months and suggests the manufacturing sector remains buoyant. Nationwide house price data yesterday also saw a small increase in house prices rising 0.2% between September and October. Both of these positive data releases ahead of the Bank of England meeting today as well as the stronger Gross Domestic product figures from last week could persuade other members to hike.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me directly at jll@currencies.co.uk.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.