Analysts divided over British pound
Published on 14.09.2017 17:05

The British pound is on its way to the $1.34 mark today after the latest interest rate decision and monetary speech Bank of England.

At 2.45pm (GMT) the British currency was trading at $1.3357 up from $1.3204 in yesterday’s close.

Although the BOE kept rates on hold this time round it was the following monetary speech which put a rocket under the pound and saw it crash through the $1.33 mark.

On the question of inflation the central bank noted that it was currently running at a higher than expected level and in the nearest future some action may be taken to tackle the problem which the market took as interest rate hikes,

“Some withdrawal of monetary stimulus is likely to be appropriate over the coming months" the bank noted.

The first rate rise since the global financial crisis may come sooner than investors think according to some, November looks like a good bet,

"If the economy continues to hold up, and there are clearer signs that wage growth is building, then the first hike could some somewhat earlier than we had previously envisaged, possibly as soon as the next meeting in November alongside the Inflation Report," noted Paul Hollingsworth, UK economist at Capital Economics

Some however are not convinced of any rate hikes in the nearest future on the back of low wage growth and the potential damage it would do to the UK population who are already feeling the pressure of less spending power,

The meagre wage growth we are seeing in spite of these trends is making it harder for the Bank of England to raise rates, especially as any rise will put yet more pressure on households who are already under strain due to a fall in their real earnings. Noted Yael Selfin, chief economist at KPMG

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Andrew Masters

Analyst

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