Bank of England interest rate decision
Today we see much awaited Bank of England interest rate decision and investors are managing to keep the markets reasonably calm ahead of the release.
With inflation being not managing to pull itself under 3% since January of 2010 there is an outside chance that we could see a rate hike in the U.K tomorrow, the last report I had read analysts had mentioned an 18 % chance of this happening.
Personally, I would be surprised to see a hike tomorrow however you can never rule these things out and should this happen we would more than likely see major Sterling strength. A hike may be slightly priced in so on the other side of matters should we see rates held the Pound may well slip ever so slightly, however all eyes will be on any comments following this which may well also cause volatility.
The U.K would in fact be the first of the Western, debt ridden countries to raise rate and a rate hike is generally seen as positive for the currency concerned so one would imagine this will be great for anyone looking to send money overseas however terrible for those looking to bring money back.
According to Bank of England's Mervyn King, high unemployment, slow wage growth and the upcoming spending cuts should curb inflation naturally in the long term, and with this cocktail of factors I find it hard to see the hike tomorrow, however a hold fire and see what happens over the coming weeks and months approach this time around.
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The United Kingdom has returned from a prolonged period of celebration, but whilst the royal couple have only suspended their honeymoon, the UK economy and the pound have been forced to bypass theirs' completely.
Sterling fell against a broadly stronger dollar on Friday after the anticipated release of US non-farm payrolls was better than expected and improved the chances that monetary policy makers would start to wind in the loose monetary stance in the US.
The run of weak UK data continued on Friday as the UK released PMI manufacturing survey for June which fell to 51.3 from the previous release of 52.1, this is the lowest release in 21 months and came a lot lower than market expectations. The data also backs the view the Bank of England is likely to keep interest rates at its current record low well into next year.
After basking in glory during Tuesday's trading session the Pound came crashing back to earth due to a double whammy of bad data from the UK.
Cash and income timing from a UK Pension or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension, QROPS and investment income taken. Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, QROPS and now QNUPS (Qualifying non UK Pension schemes).
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Coming to the end of what has been an extremely busy week on the trading floor, people are continuing to ask me – Just what will happen next? Also what is the outlook for the Pound against the currency I am looking to buy? In truth, as mentioned in the title I have to hold my hands up and say with the current U.S downgrade, European debt crisis, riots in the U.K, devaluing threats from the Swiss and carry trading movements it is harder than picking the winning horse in the Grand National .
What is going on in this volatile currency market at present, what is going to happen in the near future? Will the pound get stronger?
An overview on European debt and how this may effect the strength of the Euro
A detailed forecast on Sterling against the Euro throughout 2011 by a currency expert
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