Sterling faltered yesterday, losing ground against both the euro and US dollar after the Bank of England (BoE) policymakers voted unanimously to keep interest rates on hold at a record-low of 0.5%. Since August 2014, two members of the BoE’s monetary policy committee have voted in favour of a rate increase. However, with wages showing disappointing growth, the Eurozone – Britain’s biggest trading partner – suffering a region-wide slowdown and the fall in energy costs reducing inflation, both have brought their views in line with the rest of the committee. Sterling fell sharply on the back of this decision, hitting the lowest levels of the week against the euro before rebounding following the apparent leaking of details from the European Central Bank (ECB) announcement later today.
We are expecting few significant releases from the UK today, with investor focus trained on the ECB’s likely announcement of a broad bond-buying programme. Despite being widely expected, this still has the potential to induce significant movement across the currency markets.