What Kind of Impact Will the BoE Rate Decision Have on the British Pound?

Even though the British pound ended the US trading session unchanged against the US dollar, it is still one of the weakest currencies in the FX market because it gave back nearly all of its intraday gains. Economic data was mixed with service sector PMI increasing but consumer credit and mortgage approvals decreasing. The Bank of England will be announcing their interest rate decision next week. They are not expected to lower interest rates, but that does not mean that their interest rate cut on December 6 will be their last. The BoE could ease by as much as 75bp this year if economic growth continues to deteriorate. Since the threat to inflation is not as strong in the UK compared to the Eurozone and the US, the central bank has the luxury of focusing on the problems in the housing and credit markets. Aside from the BoE rate decision, we are also expecting the UK trade balance, leading indicators and industrial production next week.