UK's BoE keeps interest rates on hold - still waiting for Brexit developments
As widely expected, the BoE has kept rates on hold. The votes were unanimous 9-0. No one was expecting any change to monetary policy, and this will continue for as long as the Brexit picture remains murky. The MPC did note that some 80% of businesses are now ready for a no deal outcome compared to only 50% in their previous survey.
They do however maintain that Brexit uncertainty continues to weigh on confidence and short term activity. They also say that employment could moderate significantly and that Brexit developments could prompt action either way.
There has been little response to comments. As we noted earlier on, there were few surprises anticipated, so GBP continues to trade off fear more than anything else. Now that Theresa May's deal is getting the cold shoulder again from the Brexiteers and DUP, markets are repricing odds for a no deal with Cable still grinding away at demand seen into 1.3100. There is plenty more interest to buy into 1.3000.
EUR/GBP continues to claw away at offers ahead of 0.8700 and is getting closer and closer, though progress is very slow. We expect NY traders to ramp up the pressure on GBP unless there is positive news from the EU Summit later on today.