GBP falls against all major currencies (Joshua Privett)

Changes to the release of UK interest rate decision data had traders and investors around the world fixated on their computers at 12:00 GMT today. Previously the announcements were spread out across the month to control GBP volatility, the decision to release all of this on the same day condensed a month’s worth of volatility into a few minutes of trading. The results were staggering.

It was expected that 2 or 3 members would suddenly support a rate hike, after months where it was unanimously rejected. Instead only one of the 9 voted to increase the base rate. GBP had strengthened heavily in recent weeks off the back of what was expected (as this would get us close to the 5 needed for a majority) but this rather dovish tone found those gains evapourating instantly. Their reasoning was that a stock-market crash in China and a still very present Greek crisis, will continue to drag on global growth, so a rate hike would be premature. Essentially, it seems an interest rate rise in the UK has been pushed back dramatically on the calendar of investors.

This resulted in Sterling weakness. In 3 seconds GBP/EUR dropped from 1.43 to the lower 1.42’s and with an eventual low of the day of 1.419. GBP/USD rates dropped by a similar amount, with a high/low difference of 2 cents, falling to a low of 1.546 during trading today.

Anyone who will be using GBP as a purchasing currency took a hit today, but not as much as they would think. The rates we have enjoyed since the start of the week have been purely based on market psychology rather than concrete economic data to justify currency strength. Now that these hyped up expectations were not met, these current rates for GBP/EUR and other GBP pairings are a true reflection of what the highs should be for this year. I would not expect another expectation of a rate hike this year to boost rates back up again, particularly after the dovish tones heard today from guardians of UK financial policy.

The Bank of England will not boost Sterling’s value for you, so speak to an experienced currency broker who can. I can maximise the value of the Pounds you hold if you have a transaction. Even if your requirements are not until next year, you do not have to wait and hope these rates will still be available. They can be pegged to allow you to budged more effectively and make sure you don’t miss out. Email me overnight on [email protected] for a free quote and tailored advice on your transaction. Alternatively call 01494 787 478 after 8:30 am tomorrow and ask for Joshua.