Bank of England to cut rates

The pound is under further pressure today on the back of expectations that the Bank of England may slash interest rates this week in order to boost the economy after the fallout from Brexit.

At 10.18am (GMT) the British currency was trading at US$1.2864 down from US$1.2951 at close of trade on Friday.

Most analysts had been expecting a rate cut from the central bank a little later in the year but with the economy rapidly deteriorating after the Brexit vote the market is now pricing in a 78 percent chance that rates will be cut this Thursday,

 “Initially, August had looked more likely, but with economic data deteriorating and markets still nervous, it now looks probable the MPC will adjudge that immediate action is warranted.” Noted Ben Brettell, senior economist at Hargreaves Lansdown.

On top of a potential interest rate cut, some see the bank of England using other measures to breath some life into the economy such as pumping more money into the financial system.

 “We also suspect that the Bank will extend its Funding for Lending Scheme and it may very well also return to Quantitative Easing which has been on hold since November 2012 with the stock of purchases at £375billion,” Howard Archer, chief economist at IHS Global Insight

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