The Bank of England chose yesterday to increase interest rates from 0.5% to 0.75% bringing rates back to where they were in 2009. The Pound spiked to close to 1.13 shortly after the announcement but fell back quickly to the lower end of the 1.12 region as the Bank of England held their press conference.
If you’ve read some of my other recent articles I predicted that the tone would be dovish and in part one of the reasons why I think the rate hike took place was to allow room for the central bank to cut rates next year if the Brexit talks stall.
Indeed, two years ago when the referendum took place the Bank of England cut interest rates in order to stabilise what was at the time a very anxious economy.
The interest rate cut was used to encourage consumers to keep on spending as well as reduce household debt and this allowed the economy to keep on going. Therefore, this is why I think we saw the rate rise yesterday in order for them to be cut next year if required.
The central bank had been predicted to raise interest rates three months ago but owing to the problems caused by the ‘Beast from the East’ it was decided to keep rates on hold.
The bank has now predicted that the fall in growth was simply a temporary blip and expect GDP to rise and continue to do so later this year.
However, some analysts have claimed that this was not the right time to hike rates as with all the uncertainty still with Brexit then it was not a good idea and this is another reason why the Pound fell during yesterday afternoon.
In terms of upwards movement for Sterling this month there is little to be hopeful of in terms of economic data so all eyes with continue to focus on the Brexit discussions due to meet again later this month.
Therefore, if you’re thinking about buying Euros it may be worth moving in the near future.
If you would like a free quote when buying currency then contact me directly and I look forward to hearing from you. Having worked for one of the UK’s leading currency brokers since 2003 I am confident of being bale to offer you bank beating exchange rates.
Tom Holian firstname.lastname@example.org