Excel Currencies Blog

BoE Governor Bailey casts the final and decisive vote after the MPC split..

The first UK interest rate pause has finally arrived, after 14 consecutive rate rises dating back to December 2021. BoE Governor Bailey had the final say on what the central bank would do, after the MPC voted 4-4 (4 to pause & 4 to raise by 25bp). We mentioned it was going to be a 50-50 call today..

So, this signals the end of peak borrowing costs in the UK and it also aligns the BoE with both the ECB & Fed. What happens next in terms of the value of the Pound remains to be seen, as it has been propped up by high interest rates all year, alongside an initially strong economic performance (that has now evaporated).  

Initially, GBP dropped 0.5% across the board after the release and has seen nearly a 1% change between the high and low of the day against a basket of currencies. More volatility will come tomorrow with the PMI's..