UK interest rate decision


I had my doubts over the Aussie rate hike but I'd pretty much bet my car that the BoE will keep their rate exactly the same. What will be important to look out for is how they handle their Quantitative Easing Program from here on in. Their decision will certainly have a consequential effect on sterling as the market will basically be interpreting it as "things are getting better" or "things are not so great".

The majority of pundits think they will press pause and not add any more money to the progam for the moment. This may well signal "things are getting better" scenario and cable could see a rise in value, but the UK has just technically crawled out of recession so lets go easy on the champers.

If on the other hand they decide to whack in another fist full of sterling this will signal, I think, not only a "things are not so great" but a full blown "goodnight Vienna!".

To complicate and muddy the waters for poor old Mervyn and his merry men even more is the ever present British election to be held this year, (rumored to be in May), which could put pressure on where it's not needed.

Whichever way it goes I will be taking a back seat until the dust settles.