Sterling weakened from its two-week high after the Bank of England voted to keep interest rates steady. They also warned that Brexit could continue to cloud the outlook for monetary policy, stating that the pound ‘takes its orders from Westminster, not the City at the moment’. The bank also hiked its economic growth forecast to 1.5 per cent in 2019, 1.6 per cent in 2020 and 2.1 per cent in 2021.
UK Services PMI for April are released at 9:30 this morning and could affect the direction of sterling. After an unexpected contraction in March, the market will be watching closely.
In local elections, early results show that both the Conservatives and Labour have experienced significant losses, with the Liberal Democrats, the Green Party and independents making gains. This is thought to be a Brexit backlash, with the public showing their frustration at the way it has been handled.
It will be interesting to see if the smaller parties benefit from the European Elections also, which are due to take place later this month.
