There were no surprises from Bank of England’s decision of cutting interest rates yesterday by 25 basis points, now holding a base rate of 4.5%. Even if it was expected we did see motion on GBP-pairs, for example GBP/EUR fell below its psychological barrier of 1.20. The market movement came after signals from BoE members voting, 9 versus 0 in favour of lowering borrowing costs and comments from Governor Andrew Bailey.
The British economy has barely shown signs of growth since the middle of 2024. Bank of England suggest that this will continue in the short-term with a bumpy road for the UK economy, with an uptick in inflation levels – down to uncertainty of global trade policies. The UK relies heavily on imports and upcoming international tariffs can easily lead to inflated prices for goods required from overseas. With inflation levels on the upswing again, there was a very limited view on upcoming meetings on how the monetary policies will shape up.
This morning, we could see UK housing prices reaching a record high, showing a strong recovery in January after a slow down for December. A very strong demand for new mortgage applications being the main contribution to rise in housing prices. A potential reason for this is the increase of stamp duty in April for first-time buyers.
With it being the first Friday of the month, we do have US non-farm payroll being released this afternoon. Last month saw a big jump in new jobs created, surpassing expectations of 160k by an additional of 96k landing on a total of 256k. If the US could produce a second month in a row of a strong job market, could this take pressure off the Federal Reserve to lower their interest rates? Expectations is that this month will record 170k new jobs.
GBP/EUR 1.1982 GBP/USD 1.2452 GBP/AED 4.5757
GBP/AUD 1.9788 GBP/CHF 1.1283 GBP/CAD 1.7825
GBP/NZD 2.1903 EUR/USD 1.0382 GBP/ZAR 22.9399