Sterling strengthens against the dollar and the euro
Commenting on the latest Bank of England minutes, HiFX economist Andy Scott, said:
“Sterling has strengthened from a more than five-year low against the dollar, and an 11-month low against the euro, after the Bank of England minutes showed Ian McCafferty continued to vote for a rate hike.
“There’s been a very negative mood towards sterling since early December, with it depreciating almost 6% against the dollar to below 1.44, and more than 7% against the euro to 1.31 after the BoE signalled rates would be on hold for the time being. The turbulence in global markets and concerns over growth have cemented the view that UK rates will be on hold again this year, especially with inflation near zero and the oil price having fallen by almost 30% recently.
“The minutes signalled that the Monetary Policy Commitee is more sanguine about the outlook for the UK economy than the market was expecting, and may provide some respite for sterling in the days ahead. In the current environment however, with investors becoming increasingly worried about the impact of the slowdown in China, concerns over the UK economy and the risk of a Brexit look likely to continue to haunt sterling.”