BOE had a 7 to 2 vote on Thursday and decided to maintain 0.25% interest rate which is the lowest record point. It fit the expected of the market. However, according to the meeting record, most the members of Monetary Policy Committee believe they need to stop the stimulus measures in the next few months. It indicated the possibility of increasing interests and GBP.
According to Finance Times, the chief British economist of UniCredit, Daniel Vernazza, believes it is a clear sign from BOE. The market should prepare for the interests increasing in November. He also pointed out since British is still in a weak economic situation especially exporting and business investment. Therefore, the rising interests in November is still not a for sure thing. However, there has already shown something in the market. The rate of GBP exchange to USD increased 1.5% to 1.3401 USD the highest point in the year. Euro to GBP fell 1.2% to 0.8884 GBP.
Analysts increased their expectation of the trends of GBP in the latest report. Nomura increases their target price of GBP to USD at the end of the year from 1.32 to 1.40. Meanwhile, they also adjust the expectation of next year from 1.39 to 1.45. However, they decreased the expectation of Euro to GBP at the end of the year from 0.95 to 0.89.
Analyst of Nomura Jordan Rochester pointed out the central bank is always careful about their speech. However, they made a step this time and let the market realized the possibility of the coming interests rising. Rising interests in November is still not a for sure thing but the attitude of BOE has changed. They might keep support GBP in the next two years.
BTMU is now positive to the trends of GBP. They expect it would rise to around 1.4000 that GBP to USD before the middle of 2018.
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