The British pound tanked against all of the major currencies today.
The Bank of England minutes were dovish with only 7 out of the 9 members voting to keep interest rates unchanged; the two other members voted in favor of a rate cut. What was most interesting about the minutes was the sentence that alluded to the fact that the only reason why they did not cut interest rates was because they feared that cutting interest rates back to back would send a message to the markets that the MPC was focusing on the “downside risks to demand at the expense of inflation.” This indicates that rates will continue to come down, possibly as soon as the next monetary policy meeting. UK employment numbers were also weaker than expected with the improvement in jobless claims falling short of expectations. Tomorrow we have UK retail sales due for release. A drop in BRC retail sales and the disappointment in the labor market suggest that spending could be weak.
