Spreadex Market Update
Pound tumbles as normally hawkish Weale hints at some kind of BoE action in August
Though there are still a fair few weeks until the Bank of England reveals what it has in store for the markets in August, investors are still clamouring for some kind of expansion on, or explanation of, the MPC’s signal that it is likely to pull the stimulus trigger next month.
Whilst the market didn’t quite get that this morning it did get another big hint that something, be it a rate cut or more robust measures, is coming from in August from noted hawk Martin Weale. As recent as last Monday Weale was claiming that he wasn’t yet ready to vote to a rate cut; flash forward to this morning and, following those disastrous Markit PMIs last week, the MPC member sounded far more convinced of the need for fresh stimulus.
This news was unwelcomed by the pound; having held above 1.31 against the dollar and 1.19 against the euro yesterday sterling slid below both as Tuesday got underway, losing half a percent against each currency in the aftermath of Weale’s comments. This was somewhat good news for the FTSE, though the UK index’s gains (up around 10-15 points) were not as reflective of the Bank of England’s potential action next month as the pound’s losses.
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