The decision of the Bank of England’s Monetary Policy Committee (MPC) to keep rates at the current, historically low, rate was no surprise. Last month the BoE cut its base rate from 0.5% to 0.25%, as it trys to maintian the stability of the UK’s banks in the aftermath of the June 23rd referendum vote. I was hoping that the decision to maintain the rate would actually give a small boost to the Pound, making the Euro and US Dollar rates better for us just because the markets like stability.
As it happens the Pound has actually dropped a tiny bit this morning rather than gaining ground. The best Euro rates last night were around €1.163. Right now they are sitting at €1.162 and the best supermarket rate is down to €1.148. Against the US Dollar there is an identical tiny drop going from $1.308 down to $1.307 and the best supermarket rate down to 1.294.
This is pretty much as I predicted in last week’s post (Currency Question of the Day).
The other big influencer this week is probably the talk of when the Brexit negotiations will start. It was mentioned only today that the negotiations may not start until AFTER the German general election. It that is true then there will be not even be a start to the negotiations until after 22 October 2017, that is more than a year away. This is not what the leave voters probably had in mind. It also raises an interesting idea. If the start is much after that date there could be another UK general election before the end of the whole exit process. If a UK political party were to stand on a ‘remain’ manifesto and win, they could actually end the brexit. This is particularly interesting if the negotiations are not going as the exit voters had hoped. It already looks like there will be no extra money for the NHS, no significant effect on immigration and the UK would still have to contribute hundreds of millions of Pounds to the EU. Switzerland are often held up as an example and they have to pay over 600Million CHF into the EU despite not being members, just to trade with the EU and is also bound by all current EU law, as we would also be. It doesn’t look like any of the promise held up by the brexiteers are likely to become reality and that could have big impact on the electorate.