GBP Rates Before Bank of England Meeting

The Bank of England meet tomorrow for the next interest rate decision where it is expected that interest rates will remain on hold. After a series of weaker economic data the pressure is now firmly off the central bank from raising interest rates tomorrow. A combination of weak retail sales data, a drop in the performance of the services sector and most importantly the sharper fall seen in the Gross Domestic Product numbers all make for a valid reason for the Bank of England to not raise rates. Clients looking to buy Euros may wish to consider moving before the event to avoid potential disappointment.

UK GDP for the first quarter arrived at just 0.1% indicating the lowest growth in the UK in five years. The cold weather brought from the Beast from the East is the main contributor to the weaker data but there hasn’t been a bounce yet which could restore some calm to the markets.

The pound could see a small rally if the central bank indicates that it is still set for additional hikes later this year. However in my opinion the Bank of England are more likely to highlight risks to the British economy especially when considering the continuing Brexit negotiations.

For the Eurozone the European Central Bank President Mario Draghi will be speaking tomorrow and he may offer some more clues as to future monetary policy. He has recently cited low inflation as a reason to continue with its asset purchasing scheme which has proved negative for Euro exchange rates. For the moment the central bank is continuing with the tapering of the vast asset purchasing scheme and more of this rhetoric should prove negative for Euro exchange rates.

For more information on sterling exchange rates and the Euro and how to take advantage of any spikes in the currency markets then please get in touch with me at jll@currencies.co.uk

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