Good afternoon,
It looked like Sterling was in for another difficult trading session this morning as GBP/USD exchange rates hit a fresh low of $1.5593 in the build up to the release of the Bank of England meeting minutes.
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Fortunately for Sterling the minutes showed that two of the Monetary Policy Members (MPC), Ian McCafferty and Martin Weale, voted to raise interest rates in the UK for the third straight month. The announcement had an immediate impact on the currency markets and helped push the GBP/USD cross up by a cent over the course of the day, reaching a high of $1.5694 before settling around $1.5670.
As I mentioned yesterday, if there had been a change to the overall vote the knock-on effect to Sterling could have been huge. Over the last three months the vote on interest rates has remained at 7-2 in favour of keeping interest rates at their current level. Those two votes to raise interest rates have given the pound a boost in recent months and if this morning's minutes had shown Mr McCafferty or Mr Weale had jumped back on the bandwagon to keep rates on hold, the pound would have suffered massively.
What could impact exchange rates tomorrow?
Tomorrow is pretty heavy on the data front with a number of economic data releases coming from either side of the pond. In the UK we will see the latest retail figures, while from the U.S. we will get manufacturing numbers, inflation figures, unemployment claims and existing home sales. There are also a number of manufacturing numbers coming from the Eurozone. All of the above the ability to cause some volatility in the currency markets depending on the results.
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