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Will BoE rise interest rates?

Tuesday, Oct 20 2015
With no major data releases from the UK traders are focused on rate hike speculations. The CPI print could steady the pessimistic stance, but the question remains as to whether the Fed can achieve levels of inflation close to its 2 per cent target. Sterling suffered a soft finish to 2014 as markets pushed back their expectations for the first interest rate hike at the Bank of England into the end of 2015.
 
This saw the sterling rally that characterized the start of the year come to an end. January data showed UK inflation fall to 0.5% taking the pressure off the BoE to rush into an interest rate rise. The improvement in expendable income has been reflected in some strong retail sales data, significant in that consumers are a key driver of the UK economy.
 
"Will interest rates rise? The UK saw encouraging growth indicators in the early part of 2014, but faltered in the latter part of the year. Given the Bank of England (BoE)’s cautious stance on interest rates, we expect them to be raised slowly – if at all. Further falls in unemployment may increase the chances of a potential interest rate hike, but will not be the direct cause of such an action," says Charles Purdy at Smart Currency Business.
 
Sterling is currently being trade around 1.5480 area. Pair is likely to find support around 1.54 level and resistance above 1.55 area. Later today, in the US session, Building Permits and Housing Starts figures are scheduled for a release.
More in this category: « RBA gives positive assessment of the jobs market German PPI down by 0.4% »

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