The GBP/USD pair earlier traded near to a 10-month peak today as investors ponder the outcome of Thursday’s monetary policy decision which could see an interest rate hike, the first in more than 10 years. While the voting members of the Bank of England, namely the Monetary Policy Committee, have taken a decidedly wait-and-see stance, there is hope that the recent hawkish rhetoric could be a turning point for policy. The latest polls show that economists are forecasting no change to interest rates at the current 0.25% and Quantitative Easing is also likely unchanged at the current level.
As reported at 11:08 am (BST) in London, the GBP/USD was trading at $1.31, down 0.14%; the pair had earlier hit a peak of $1.31518 while the session trough stands at $1.30965. The EUR/GBP is trading flat at 0.8949 Pence, off the session low of 0.89309 Pence while the peak is currently at 0.89619 Pence.
Rate Hike Hopes Lose Momentum
Since the Brexit vote more than a year ago, there has been great uncertainty how the withdrawal from the EU would impact Britain’s economy. The latest data, unsecured lending growth and mortgage approvals, came in weaker than anticipated, and that has some FX traders fearing that the central bank will decide to maintain the status quo. After the decision is announced, markets will focus on the speech by BOE Governor Mark Carney for additional clues as to the timing of any policy change.