020 7898 0500Today is the day everyone has been waiting for, with BoE set to make an announcement on whether they will increase interest rates for the first time in more than a decade. The markets have priced in a hike and traders seem convinced it is going to happen – as such, the pound has been making steady gains against the euro and US dollar in the last few days.
However, yesterday there was some data that helped support the recent strength, as manufacturing PMI came in at 56.3 in October from 56.0 in September. Any figure over 50 indicates growth, so the reading is rather impressive. A surge of new factory orders was cited as the main reason for growth and that should serve to encourage those who are calling for a rate hike. It’s a tricky call – inflation is likely top 3% very soon and so something needs to be done, but then as it continues to outpace wage growth the British public will feel the pinch even more. A rate hike is good for savers but bad for borrowers.
We will also have an update on the central bank’s quantitative easing programme and the MPC meeting minutes. It will be interesting to see what their outlook is for the remainder of the year and 2018.
Look at the chart below which shows the recent volatility from one day to the next. It looks like a child’s drawing you might hang on the fridge! In all seriousness, it does highlight how important currency risk management is in these uncertain times. Get in touch today to see how we can help provide guidance that is tailored to your business’s unique situation.
