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Pound Sterling under pressure

The BoE brings down Sterling..

A dovish pivot by MPC members yesterday over what to do with UK interest rates has seen the Pound fall. A vote of 8-1 to keep interest rates unchanged, meant the two hawkish members who voted for an interest rate rise last time out, have seen enough evidence that inflation is finally under control. 

This paves the way for a sooner than expected interest rate cut, which is deemed good for consumers, but bad for GBP. There are some economists saying there is a 50% chance of an interest cut in May, which would be a huge blow to the Pound.

As of now, money markets have priced in an 80% chance for a interest rate cut in June. This looks to be on par with both the EU & US currently and that may mean more bad news for Sterling. This is because it has been trading in the higher range levels across the board, on the notion that the UK will start cutting interest rates later and slower than both the EU & US.

In slightly more positive news, UK retail sales figures for February arrived better than forecast (even though the number was flat). It means retail sales are on track to lift the economy out of recession in Q1 this year. UK PMI data slightly undershot forecasts yesterday, but still performed firmly for March.

£-€ is currently down 1.2% in the last 10-days and £-$ is down 2% in the same time-frame. Both are still trading in the higher range thresholds though, so no need for panic stations just yet..