Good afternoon,

Today the Monetary Policy Committee meet to steer the UK economy into the winter months of the year. The committee meet at lunch time in London to vote on the central bank interest rate and also for the stimulus injected into the economy to support the cycle of money supply, through the asset purchase facility. General consensus is that interest rates and the purchase facility will be unchanged and remain at current levels. However, as always, markets will be looking to the tone used and the choice of words from the following press conference. The UK is rumoured to be one of the first major economies to be looking to increase interest rates following the Covid pandemic. Markets are expecting the rate to increase from the current record low 0.1%, which should take effect from the first quarter in 2022. If this is the case, then GBP could be provided with a much-needed boost heading into the last couple of days of the working week.

Late in the day yesterday, the Fed also met to vote on their interest rate and asset purchase scheme for the coming months. As expected, both remained unchanged with growth projections cut for 2021. However, Fed chair Jerome Powell shocked markets by announcing a taper to plans could begin as soon as the next meeting which saw a near 0.6% drop to GBP-USD. All eyes are now on the BoE to see their move.

Have a great day.

Jack Nicholls, Senior Relationship Manager.

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