Private DCN Private DCN - Sterling

Bank of England stands ready

By Michael Cooper December 16th, 2016

Yesterday saw UK retail sales grow by 0.2 percent on a month-on-month basis, as expected. However, year-on-year sales for this November versus last year rose to 6 percent, due to the extended black Friday sales. The slowing momentum on the monthly figures may be of concern as inflation and political uncertainty could be deterring additional spending. The Bank of England (BoE) also kept rates and the quantitative easing programme on hold as expected. It was the policy statement that investors were keen to decipher, as the bank continues to adjust forecasts on economic growth and policy. The BoE’s statement revealed that monetary policy can respond in either direction to changes in the economic outlook, and they will take whatever action necessary to control inflation. In addition, the BoE recognises that month-to-month sterling (GBP, pound) volatility is likely as the market view on UK/EU relationships evolves.

Today we only have the BoE quarterly bulletin. Normally this causes some volatility, but given the BoE rate decision and statement today it’s unlikely to have the same level of impact on the market.