Well, it's bonfire night, and there's certainly been fireworks for the Pound. Yesterday's BoE rate decision has had exactly the effect we indicated. Sterling has had a major drop against the majors including the Euro, the Dollar and the Swedish Krona.
Against the Euro it's more likely than not to retest the longer term range low, so, outside of a news story to turn things around it's possible that the rate will continue dropping. Yesterday's major (although slightly bypassed news) was the change in the number of votes for a rate hike. Analysts had believed the Bank of England would have raised rates yesterday. However the Monetary Policy Committee actually showed a shift towards keeping the rate the same. Last month 3 members voted for a rate hike whereas only 2 voted for it yesterday.
This could well be because the inflation rate is difficult to gauge as it's a comparison with last year when things were very different to normal. However it might also be a reflection of the Covid situation in the UK where hospitalisation and deaths are unfortunately rising indicating Plan B may be on the way.
Looking to today there's big news this afternoon also with the US Non Farm Payrolls out later. If last months surprise outcome is mirrored expect the Dollar to strengthen even further against the Pound.
As ever we look forward to keeping you in the loop and look out for our next update.
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Today’s Economic Calendar
EUR: 10:00 Retail Sales
US: 12:30 Non Farm Payrolls
CHN: Sunday 02:00 Imports and Exports