Bank of England cuts rates by 1.5% to 3%
Disclaimer: THIS MATERIAL IS NOT INVESTMENT RESEARCH AS DEFINED BY THE FINANCIAL SERVICES AUTHORITY
The Bank of England has surprised the market cutting interest rates by 1.5% to 3% the lowest since the 1950s. A 150 basis point cut was predicted by none of the economists.
As the breaking news hit the currency markets, initially Sterling was sold across the majors and is now being aggressively brought by traders. The pound has hit new highs for the day against the Euro. Against the US Dollar, it is a similar story with Sterling trading close to the high of the day.
Traders have rewarded the Monetary Policy committee for the aggressive cut and proactive move. It is expected the rally in sterling should continue at least for the next few days. From a technical perspective, the medium term target for cable is the 1.6950 region. Against the Euro, Sterling was trading fairly close to all-time lows over the last few days. The pressure is on the Euro as we await the ECB interest rate decision at 12:45.
Policy makers have tried to limit the damage caused by the banking crisis, benchmark interest rates have never been below 2%, now this does not seem that far away.
Thursday 06 November 2008, 12:43pm
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