06 August, 2017
Fawad Razaqzada, an analyst with Forex.com, said investors were disappointed that only two Bank of England monetary policy council members voted in favour of a rate hike - suggesting that such a move is now far off. Good news for Buy to Let mortgage borrowers, but the reasons are less good for the economy.
Wage growth was also revised down by the bank.
Sterling - supported recently on hopes of an interest rate rise - fell back against the dollar in the wake of the Bank's remarks, by nearly a cent, to $1.3160. Ian McCafferty and Michael Saunders voted for the rise.
A subtle change in language also suggested that the Bank may be increasingly anxious about the chances of Britain securing a smooth transition out of the EU. It can influence how this hit to incomes is distributed between job losses and price rises, and it can support United Kingdom households and businesses as they adjust to such profound change.
Nevertheless, only a limited pick-up in growth would have significant implications for monetary policy given a lack of spare capacity.
Another element traders should focus on, is the Quarterly inflation report.
Speaking at a press conference yesterday, Mark Carney, governor of the Bank of England, said: "Since the referendum was called United Kingdom households and businesses and the financial markets have reacted at different speeds and to varying degrees to the prospects for the UK's departure from the EU".
Interest rates may increase faster in the future than financial markets have priced in, the Bank of England's (BoE) deputy governor has said. He added that Brexit uncertainty was also hitting pay negotiations.
Increasing rain chances & cooler temperatures this week
Friday , a chance of showers and thunderstorms before 2 p.m., then showers likely and possibly a storm after 2 p.m. Lows through this period will be in the low 70s with mostly cloudy skies and lingering rain chances.
Businesses have been somewhere in between.
But warned that they had invested less aggressively than they would have usually done to an otherwise favorable environment.
The BOE's outlook for inflation is broadly similar to that in May too. In minutes from its latest meeting, the BoE said GDP "remains sluggish in the near-term as the squeeze on households´ real incomes continues to weigh on consumption", as Britain gears up to exit the European Union against a backdrop of high domestic inflation.
Fabrice Montagne, chief United Kingdom and senior European economist at Barclays, said: "We expect the Bank of England to downgrade its forecast in order to reflect disappointing data".
Prior to June's inflation reading of 2.6%, there had been growing clamour for a rate rise as a Brexit-fuelled increase in the cost of living ramps up pressure on hard-pressed households.
The MPC says it expects inflation to rise in the next few months, peaking at around 3% in October.
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It blamed the overshoot on the effects of the referendum-related falls in sterling.