The Bank of England (BoE) has raised interest rates for the first time since July 2007 to 0.5%, forecasting two more rate hikes over the next three years.
Two of the Monetary Policy Committee (MPC) were in favour of retaining the existing rates, but were outvoted by the rest of the Monetary Policy Committee. This speaks volumes about the perception of the strength of the UK economy and has had a dramatic effect on the Pound, demonstrating the uncertainty and volatility of currency markets in the current economic climate.
David Johnson, founding director of Halo Financial, commented, “The Bank of England’s 25 basis point interest rate hike was so widely expected that the announcements were something of an anti-climax. What wasn’t expected was the statement that the BoE saw no more than two further 0.25% hikes in the next three years. That rather dovish view saw Sterling, which had gained half a cent against the Euro in the seconds after the announcement, dive by a full cent in the following 30 seconds.
Such is the nervousness in the foreign exchange markets. Surely traders, when they sit back and review the BoE’s decision and announcement, will realise this was not so unexpected, but it is rare for a central bank to give such long term guidance – and that has battered the wind from traders’ sails in the short term. A slower but more sustainable Sterling recovery may well be the next move.”
We expect continued volatility as markets digest the situation and as other economic events unfold in the US and Europe.
About Halo Financial
Halo Financial is a leading UK foreign exchange brokerage, offering a comprehensive range of services to individuals and businesses since its inception in 2005. The business prides itself on offering a flexible and personalised approach for each of its clients, simplifying the seemingly complex foreign exchange market to maximise savings in currency transactions, protect against currency risk and make money go further.
Staffed by qualified technical analysts, the company is authorised by the Financial Conduct Authority and HM Revenue and Customs.
“Excellent”, “Reliable”, “Professional”, “Knowledgeable”, and “Helpful”– just some of the great feedback received as a Gold Trusted Service Provider for Feefo.com. The team at Halo are proud that customers rate their services so highly and are happy to recommend to others. The company is always striving to provide the best possible service and to innovate services and products in line with customers’ ever-evolving needs.
Halo Financial won Best Customer Focus category in the 2016 Best Business Awards; received OPP Gold for Best Supporting Service; the Gold Award for Financial Support and Innovation from Relocate Magazine, Commendations in the 2016 and 2017 Moneyfacts Awards and has 5 out 5 Star Customer Gold Merchant Status via independent review website, Feefo.com, winning their Gold Trusted Service award.
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