The BoE cut interest rates as expected and the Pound continues to follow its historic performance..
| GBP
| As we always do before a Bank of England meeting, we mention that historically the Pound falls in the build-up to the announcement. No surprise then that GBP fell 0.5% on the day, before recovering as the day went on..
Why does this happen? I and the hundreds of people I'm connected with in the industry can't tell you for sure, so instead, I just advise that it's going to happen and to prepare for it. Anyway, a 25bp rate cut came to fruition, but the way in which 1-voter in particular voted was unexpected..
7 members voted for a 0.25% cut and 2 others for a 0.5% drop. Surprisingly, 1 of the latter was Catherine Mann. This is significant news as she is known for a staunch hawkishness on rates, meaning she wants rates higher for longer. She voted against the previous two rate cuts and was the last person to stop voting for rate hikes.
Mann speaks tomorrow morning on her change of stance..
The person who moved the Pound more than any other event last year, BoE Governor Bailey, also speaks tomorrow and so expect to potentially see some fireworks in the market.
The main event though is expected to be the UK's GDP figure, which is expected to show a -0.1% growth number for Q4 last year. Any deviation will create volatility for Sterling.
EUR The Euro-Zone release its Q4 GDP number this week, which is expected to be better than the UK's and so by that comparison we could see a EUR gain against the Pound.
Other than that, it's the sitting duck role for the single currency that has been silently moving side-ways the past week versus the majority of currencies.
USD The Pound is down 1% versus the Dollar since last week, but up 1.5% in the last month. A clear sign the pair will be particularly 'spiky' in terms of trading ranges this year. This is where Forward Contracts help steady the ship.
There is plenty of economic data due out of the US this week and so expect to see the daily volatility remain heightened.
Please check out the main events of the week below..
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