Sterling Drops After MPC Rate Announcement
The pound fell against both the euro and the dollar on Thursday after two of the nine members of the Monetary Policy Committee voted in favour of an interest rate cut at this month’s meeting. The minutes revealed that Jonathan Haskel and Michael Saunders voted in favour of loosening monetary policy, citing economic weakness as justification for an immediate interest rate cut to 0.5%.
The minutes from the MPC meeting painted a pretty gloomy picture of the UK economy as the Bank of England made downward revisions to projected economic growth, warning of mounting weakness in the British economy. The news pushed the pound down further against most of its major counterparts with GBP/EUR dropping into the 1.16’s and GBP/USD falling to 1.30. The pound has now lost 3% this week as fears over a hard Brexit have resurfaced.
Current account and GDP figures from the UK tomorrow are likely to cause some market movement so it should be an interesting end to the week for sterling.