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Weekly roundup: Pound slumps as BoE leaves rates on hold

currency-newsWeekly roundup: Pound slumps as BoE leaves rates on hold
The pound fell back against the majority of its peers again last week as markets reacted to the Bank of England’s (BoE) latest policy meeting.

Last week saw the focus for GBP investors remain squarely on interest rates as hopes of a potential rate hike from the BoE were finally put to bed.

However despite some lacklustre data at the start of the week, with the UK’s house price index plunging 3.1% in April and a gloomy retail report suggesting figures also declined last month, the pound was actually able to find some gains in the run up to the BoE’s rate decision.

Unfortunately these gains were quickly erased on Thursday as policymakers at the BoE voted 7-2 in favour of leaving interest rates on hold in May.

Also weakening Sterling sentiment in the wake of the bank’s policy meeting was the revision of the BoE’s growth outlook, with policymakers downgrading their forecasts for this year from 1.8% to 1.4%, in light of the disruption caused by the ‘Beast from the East’.

Looking ahead, the focus this week will be on the UK’s latest employment figures, which are expected to see unemployment hold at a 42-year low of 4.2%.

However it is likely to be the accompanying wage figures which prompt the greatest reaction by markets, with the pound potentially plummeting if wage growth slowed in March, as forecast.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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