Bank of England cuts its growth forecasts for the UK

Support Mc Donnell joins protesters
Support Mc Donnell joins protesters
Author

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.

XM is a fully regulated next-generation financial services provider of online trading on currency exchange, commodities, equity indices, precious metals and energies, with services to clients from over 196 countries worldwide.Founded in 2009 by market experts with extensive knowledge of the global forex and capital markets and with the aim to ensure fair and reliable trading conditions for every client, XM has reached international recognition by virtue of its unbeatable execution of orders, spreads as low as zero pips on over 50 currency pairs, gold and silver, flexible leverage up to 888:1, and personalized customer engagement to foster clients' success.

It blamed the overshoot on the effects of the referendum-related falls in sterling.


More news


  • Mythbusting the Samsung Galaxy X

    Mythbusting the Samsung Galaxy X

    The Galaxy Note 8, however, will launch on the same day in South Korea as the LG V30 , which is an extremely rare occurrence. In addition to the specifications leaking out, a new teaser image too, has been spotted by well known tipster Evan Blass .
    Earthquakes Shake Oklahoma in 24 Hours

    Earthquakes Shake Oklahoma in 24 Hours

    Four hours later, a less intense quake of a preliminary magnitude 3.5 struck the area in the early hours of Thursday. The quake, one of several felt in Edmond in the last two days, knocked out power in parts of the city.
    Russian lawyer who met Donald Trump's son worked for intelligence agency

    Russian lawyer who met Donald Trump's son worked for intelligence agency

    Browder argued that Fusion GPS, an American opposition research firm, has also functioned as an arm of the Russian government. It's been said by people who attended that meeting. 'What they were willing to offer in return I don't know.
  • Ryan Tannehill leaves Dolphins practice with apparent leg injury

    Ryan Tannehill leaves Dolphins practice with apparent leg injury

    In the non-contact mishap, Tannehill reportedly fell "awkwardly" while scrambling to the sidelines during a training camp drill. Tannehill's injury comes four days after Pro Bowl running back Jay Ajayi left practice early to be evaluated for a concussion.
    Charter Communications declines a merger with Sprint

    Charter Communications declines a merger with Sprint

    Analysts had been expecting a loss of 1 cent a share on revenue of $8.16 billion, according to Factset. Shares of Sprint Corp . rose 82 cents, or 10 percent, to $8.80 in late morning trading.
    HSBC Tops First Half Estimates, Boosts Share Buyback Program by $2 Billion

    HSBC Tops First Half Estimates, Boosts Share Buyback Program by $2 Billion

    Europe's biggest bank reported a pre-tax profit of $10.2bn (£7.8bn) for the first six months, up by about $500m. The latest share buyback lifts the total buybacks by the bank the this year to $5.5 billion.
  • Santos will not recognize Maduro's National Constituent Assembly or its decisions

    Santos will not recognize Maduro's National Constituent Assembly or its decisions

    Members of the Constituent Assembly attend its installation at the National Congress in Caracas on August 4, 2017. But the government and the opposition parties never agreed on the number of protest deaths.

    Should Analyst help in decision?: Tesla, Inc. (TSLA)

    The first 30 Tesla Model 3 cars being handed over to employee buyers at the company's Fremont facility in California on Friday. Tesla burned through a record amount of cash in the second quarter as it prepared to unveil its Model 3 sedan.

    Jose Mourinho sends message to Alvaro Morata after joining Chelsea

    Chelsea head coach Antonio Conte says that Alvaro Morata requires time to adapt to life with the Blues before producing his best performances.
  • Afghan official blast at Shiite mosque kills 20

    Afghan official blast at Shiite mosque kills 20

    The explosion happened at the Baqir-ul-uloom mosque in the Darul Aman area as people gathered for a religious ceremony. He said at least 25 others who sustained injuries in the attack were also shifted to the hospital for the treatment.
    RS polls: Amit Shah, Smriti Irani and Rajput file nominations

    RS polls: Amit Shah, Smriti Irani and Rajput file nominations

    Senior Congress leader Ahmed Patel is now the MP from the state and his party is likely to renominate him. BJP's national president, Amit Shah is all set to join the national politics with his latest move.
    GM earnings fall, outlook holds steady

    GM earnings fall, outlook holds steady

    Several analysts have released their opinion on General Motors Company (NYSE:GM), with 4 analysts believing it is a strong buy. The (Simple Month Average) SMA20 is at 0.29 percent, its SMA50 Value is 3.11% and SMA200 value is reported as 2.17 Percent.