Bank of England split keeps Pound strong

By James Caley

Last week, GBP found itself at the upper boundary of its range against the Euro, reaching one of its high points for the year and providing euro buyers with the most attractive rates we’ve seen in quite some time.

Against the US Dollar, Sterling continued to fluctuate within its 2-cent range, experiencing both highs and lows. The rates took a dip towards the end of the week, responding to better-than-expected US job and wage numbers, thereby diminishing the likelihood of a Federal Reserve rate cut in March.

The Euro, on the other hand, depreciated against the Dollar following its strengthening in response to nonfarm payrolls surging to 353,000, surpassing the expected 180,000.

Bank of England Governor Bailey highlighted welcome progress on inflation, emphasising that the committee requires concrete evidence of sustainable declines to 2% before considering rate cuts.

The decision-making process to hold rates reflected a 6-3 vote, with Haskel and Mann advocating for a further interest rate increase, while Dhingra voted to cut rates to 5.00%. Haskel and Mann expressed concerns about inflation pressures, whereas Dhingra focused on the potential risk of overkill.

A pivotal takeaway is the Bank of England’s explicit communication that the conditions for a rate cut are unlikely to be met for some time. During the press conference, Governor Bailey addressed enquiries about the BoE’s decision not to lower its key interest rate despite the sharp drop in inflation. Bailey justified this stance by pointing out that high inflation, still at 4% despite recent declines, was also a concern for the public. It is crucial to bring inflation back to the 2% target in the long term.

This week a multitude of economic data releases may introduce uncertainty to the market. If you’re actively engaged and have a specific currency requirement, it’s recommended to consult with one of our experienced currency experts. Their insights can provide a valuable perspective on the market helping you to minimise any potential risks.

The economic data releases for this week include:


  • Euro Area Producer Price Inflation
  • United States Fed Funds Interest Rate


  • United Kingdom BRC Retail Sales
  • Euro Area Retail Sales


  • Halifax House Price Index


  • Bank of England’s L. Mann Speech
  • European Central Bank’s Lane Speech
  • Federal Reserve’s Barkin Speech


  • Euro Area Producer Price Inflation