Foreign Exchange Daily Market Update 16/03/2017

Thu, March 16, 2017

Pound Strengthens Against Dollar After US Rate Hike

The US Fed has made a third interest rate rise since the 2008 financial crash and the second in three months, increasing the base rate by 0.25% to 1%.

The central bank set aside worry about the effect of higher interest rates on consumer spending to support analyst forecasts that it is prepared to increase rates many times this year to keep a cap on inflation as it advances above its 2% target level.

Faster inflation seems to be making a case for a rate increase at the BOE, but current signs of a falling economy and the impending Brexit negotiations mean officials aren’t ready to do that yet.

The BOE makes it announcement on its policy decision at 12pm today, and economists expect the benchmark rate will remain at a record-low 0.2%. With the pound’s 18% decline since the referendum fanning consumer prices and starting to squeeze households, officials will probably allow inflation to hover above target so as not to subdue growth.

The Pound rose against the Dollar overnight, reaching a high of 1.2299 before falling to 1.2241. The Pound fell against the Euro to 1.1432.

Data to look out for today.

12:00: GBP BOE Rate Decision

12:00: GBP BOE Asset Purchase Target

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PRESS RELEASE

KBRFX was mentioned in the Essex Chronicle for the top 100 companies by turnover in Essex http://www.essexchronicle.co.uk/100-Essex-businesses-revealed-annual-survey/story-25140555-detail/story.html

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