The Euro edged up against the Pound Sterling earlier today as markets focus on the upcoming policy meeting of the Bank of England. Although recent UK-based data has been hit or miss, the recent job cuts, some 3,000, at one of the UK’s leading banking firms, Lloyds Bank, suggests there are still underlying concerns of a worsening outlook for the UK economy. Analysts polled believe that the BoE is likely to lower rates by at least 25 basis points from the existing 0.5%. One policymaker at the BoE even suggested a reduction into negative territory and many local banks have begun warning their customers that they may begin charging a fee for cash deposits.
As reported at 10:48 am (BST) in London, the EUR/GBP was trading at 0.819 Pence, up 0.62%; the pair has ranged from a session trough of 0.8351 Pence to a peak of 0.8420 Pence. The GBP/USD was down 0.26% to $1.3173; the pair had earlier hit a low of $1.3156 and a peak of $1.3247 in today’s trading session. The Euro also gained ground against the Dollar, trading higher at $1.1093, up 0.34%; the pair ranged from a session low of $1.1047 to a peak of $1.1118.
Markets Wary of a BoE Surprise
Markets have not yet cut in the possibility of a rate cut from the BoE given the tendencies of the past to surprise negatively. According to one analyst in Paris, market sentiment at this point is probably correct not to underestimate the policymakers. Nonetheless, he says, the possibility of negative rates could be a viable one if very soft data continues to come in over the next quarter.