MPC vote could swing GBP/EUR
We have seen the pound rise in value this week against the euro following an increase in inflation. The Bank of England (BOE) have indicated if inflation continues to rise there is the chance of a rate hike. So the data release increased investor confidence and the pound strengthened.
I am of the opinion the rise in inflation is not a positive. The weak value of the pound is causing imports to become more expensive, businesses are then passing the price increase onto the consumer. This is all very well if consumers continue to spend, if they don’t, the economy is in trouble.
This is why average wage growth should move at the same pace as inflation, at present it isn’t sitting at 2.1% a decline from previous figures. Whereas inflation rose to 2.9%. A rate hike is not the solution when you want to in courage spending. I would be surprised to see an change in rates today, however the Monetary Policy Committee (MPC) vote could well influence the markets. The MPC consists of eight members who vote on whether there should be an alteration to interest rates. If the vote differs from the previous month expect market movement as the result gives an indication to future monetary policy.Keep an eye on results this afternoon if you have a GBP/EUR requirement.
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