020 7898 0500The GBP/USD pairing tumbled from an 11-month high, while the GBP/EUR pairing fell to a nine-month low yesterday. This came on the back of the cautious tone struck by the BoE at its ‘Super Thursday’ meeting. During the press conference for the quarterly inflation report we saw sentiment change. A month ago there was speculation that UK interest rates could rise in the near future following a shock 5-3 vote.
But it was not to be, as the members voted 6-2 in favour of keeping rates on hold. In his speech, Governor Carney warned that uncertainty over Brexit is beginning to weigh on the UK economy. In terms of inflation, the BoE raised its forecast for 2017 to 2.7% from 2.6%. It’s clear that the BoE are concerned over how Brexit might play out and, while this continues, an interest rate hike remains unlikely for the remainder of 2017.
On a more positive note we saw the PMI services post a better-than-expected reading, but in light of the inflation report, the gains from this report were erased. The underlying feeling from the three PMI’s this week is that the UK economy is just about holding its own but uncertainty is rising.
There is no major data from the UK today, but with the release of the US jobs number there is the possibility of further volatility.
