Mark Carney stimulated Sterling today even though interest rates were kept on hold. He suggested that the current upward movement of inflation will inevitably result in an interest rate hike. Whilst this doesn’t suggest there is anything imminent on the cards the Mr Carney’s positivity rallied the Pound a cent.
Possibly more important was a member of the 9-man committee decided to vote for an interest rate hike. The 8-1 decision in favour of keeping rates on hold indicates there are members of the committee who believe a hike is necessary. This was the first time since July 2016 that there hasn’t been a unanimous vote from the committee.
The minutes for the meeting suggested that it wouldn’t take much more upside prospects for the Bank of England to raise interest rates, with the UK growth forecast increased to 2% for the year a hike is likely to occur this year.
Busy week for Pound Sterling exchange next week
Sterling has a quiet day of data to end the week tomorrow, however that can’t be said for the start of next week. There is a hat-full of economic data coming out next week which should provide indicators of business performance. Really strong data may now be leading up to a rate hike this year. UK data has become a little anonymous to Sterling movements with so much focus on Brexit and political events. However, if the data releases become significant once again there could be even more volatility than previously.