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13th May 2024 | Bank of England…

Today’s Headlines:

  • Interest Rate Cut on the Horizon: Delve into the growing momentum behind calls for a rate reduction by the Bank of England, as recent voting patterns and economic indicators hint at a potential shift in monetary policy.
  • UK Economic Recovery: Explore the latest GDP figures and industrial trends revealing the UK’s emergence from recession, alongside cautious optimism amidst projections of gradual growth throughout the year.

In Depth: This Week’s Market Update

The Bank of England announced that interest rates were held again, which should not come as too much of a surprise. However, the appetite is increasing for an interest rate cut, as two of the nine MPC members voted for a rate cut, which caused Sterling exchange rates to fall immediately after the announcement.

The question should not be if, but when, the Bank of England will start cutting rates, and if inflation continues to fall, this could cause the BoE to consider cutting interest rates later this year.

UK GDP figures showed that the UK has officially moved out of recession, as the tide appears to be turning for the British economy. Industrial and Manufacturing data also showed some very positive signs. However, although we have returned to growth, the UK is only expected to see slow growth during the course of this year.

On Tuesday, UK Average Earnings and Unemployment data are both due to be released, and the data is likely to provide another sign as to how the British economy is performing.

Wednesday is likely to be an important day for anyone with a US Dollar exchange to make, as we see the release of both Inflation data and Retail Sales. The Federal Reserve is still yet to cut interest rates, but another sign of inflation falling could signal that a rate cut may not be too far in the future.

For a more comprehensive discussion on the factors driving and potentially influencing your exchange rate in the future, please consult your Lumon account manager. We offer a variety of tools to mitigate your exposure to the uncertain FX markets, ensuring that your currency transactions never exceed your budget and enabling you to make well-informed decisions.