Sterling weakened yesterday following disappointing GDP data, which increased expectations that there may be an interest rate cut in the near future. The UK economy grew 0.6% year-on-year in November 2019, the weakest expansion since June 2012. Service sector firms and manufacturers both failed to grow, as political uncertainty over December’s general election and ongoing Brexit tensions hit the economy.
The next Bank of England meeting will happen in two weeks’ time and several policymakers have already hinted that there may be a cut. It is thought that there is now a 50% chance of a rate cut at the January meeting.
Bank of England official, Michael Saunders, is due to make a speech tomorrow, which may reveal more about the BoE’s stance.
