Sterling swung wildly over the course of yesterday against most currencies as the markets prepared for and then reacted to the Bank of England’s (BoE) interest rate decision, before finally ending the day roughly where it began.
This morning the US dollar has strengthened sharply once again.
The Monetary Policy Committee (MPC’s) decision to raise interest rates was unanimous, but it was completely split on how far, with five of the nine voting for 50 basis points, three for 75 and one for 25. This is the first three-way split since the financial crisis. The end result was a rise to 2.25%, the highest since 2008, and the BoE report said that the UK was probably already in recession.
Today is the Chancellor Kwasi Kwarteng’s mini Budget, which is expected to be a “tax cut bonanza”, according to The Times, a £50bn gamble to break the “vicious cycle of stagnation” as Kwarteng has put it.
Overnight the Gfk Consumer Confidence for the UK reading has come in at a record low of -49 in September, flying in the face of the government’s rescue package on household energy bills.
The week comes to an end for UK data at 9.30 with a first (“flash”) reading for S&P Global/CIPS PMI. Last month services PMI outshone readings from the eurozone – but will it today? We’ll know at 9.30am.
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