Pound to suffer as rates kept on hold

Open demo account
FOREX trading implies serious risk and can result in the loss of your invested capital

Financial and commodity markets analytics

The British pound has remained surprisingly resilient today after the latest interest rate decision from the bank of England who voted to leave rates on hold at 0.5 percent.

Board members of the BOE voted 7-2 to keep rates unchanged and the following statement regarding inflation gave investors the impression that the central bank would leave rates on hold for the rest of the year with no move now expected until 2019.

According to the BOE, inflation will fall to the bank’s preferred target rate of around 2 percent much faster than earlier predictions so the need to hike rates at this time was not warranted.

They also added that the economy barely grew in the first 3 months of the year, which only added to the case to keep rates the same.

Some analysts believe the BOE were careless in leaving rates on hold for so long as overall, the UK economy has experienced nearly a decade of economic growth since the financial crisis and there was ample chances to hike rates.

The trouble now they say is should the UK economy begin to turn sour because of Brexit negotiations among other things, The BOE will have no room to cut rates from the already record lows which leaves the economy very vulnerable.

"Another poor decision by MPC, keeping interest rates at 0.5pc despite nine years of economic recovery, a buoyant global economy, above target inflation and the lowest unemployment rate for 43 years. A failure of monetary policy strategy and leadership." Said Andrew Sentance, an economist with PwC

The material published in on this page is produced by the FIBO group companies, and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Fibo Markets

FIBO Markets Ltd. (ex. FIBO Group Holdings Ltd.) is authorized and regulated by the CySEC (licence no. 118/10) and operates in accordance with the Markets in Financial Instruments Directive (MiFID) of the European Union.

Unfortunately, our services are not available to individuals residing in Canada, the United States of America, North Korea, Iran, Iraq, Israel, Australia, Belgium, or Japan.

29 Agias Zonis, 1st Floor, 3027, Limassol, Cyprus

© 1998—2023 FIBO Markets Ltd. (ex. FIBO Group Holdings Ltd.)

IMPORTANT: Please be informed, that our services are available for Professional Clients only. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Please note that our services are provided only to the residents of the following counties (in alphabetical order): Austria, Bulgaria, British Virgin Islands, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Kazakhstan, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Oman, People's Republic of China, Poland, Portugal, Romania, Russia, Slovakia,Slovenia, Spain, Sweden, Ukraine, United Arab Emirates.

Please feel free to contact out Support in order to get further assistance.