020 7898 0500A recent positive run for sterling ended dramatically on Thursday and continued into Friday. For, while BoE raised UK interest rates as expected, the dovish tone that Carney struck in his press conference caused sterling to plummet against the euro and US dollar. Deputy Governor Ben Broadbent spoke on Friday and suggested that the Uk economy could withstand two more rate rises over the next year. However, the comments did nothing to the pound against the greenback as it continued its descent.
There was some good news towards the back end of last week though, as UK services PMI figures showed that it jumped to 55.6 in October from 53.6 in September. This was better than analysts had predicted and will provide some comfort to BoE policymakers. The pound did manage to claw back some of Thursday’s losses against the euro and dollar, but the gains were slight.
It is a relatively quiet week for UK economic data, but today we get new car sales for the year, tomorrow sees the Halifax house prices release and on Friday we get the balance of trade.
The chart belows shows sterling movements against the US dollar over the last month. As you can see, it’s been a remarkable period of volatility of late.
