Yesterday, the Bank of England maintained the bank rate at 5%, as predicted. The MPC voted 8-1 to keep interest rates unchanged, with one member supporting a 25 basis point drop.
The Monetary Policy Committee is reviewing a mixed bag of data, with headline inflation generally close to its 2% objective, but price increases in services, which are responsible for around 80% of the UK economy, edged up to 5.6% in August. Wage growth in the United Kingdom fell to a more than two-year low in the three months to July, but remained quite strong at 5.1%
.
Elsewhere, markets were upbeat as analysts digested the Fed’s decision to slash interest rates by a whopping 50 basis points. Meanwhile, the BoJ chose to leave policy on hold overnight, as expected. The market’s reaction to the decision was modest.
Yesterday, the dollar experienced some downward pressure. At the same time, sterling had a firmer tone.
Already this morning, UK retail sales rose by 1% in August (compared to +0.4% forecast). Sterling has taken the lead in early trade following the release. Later today, the big feature will be the flash reading of Eurozone consumer confidence in September.
For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.