Key Headline:

·       UK Interest Rates on Hold: The Bank of England has kept rates steady at 5.25%.

·       Hawkish Tone: Policymakers signalled that rate cuts may not happen soon, emphasizing the need to keep rates higher for longer.

·       Market Impact: Investors are adjusting expectations, with uncertainty around when rates might start to decline.

·       Political Implications: Shadow Chancellor Rachel Reeves could face pressure ahead of next week’s budget, as stagnant rates may limit fiscal flexibility.

Recap

·      Bank of England Holds Rates: The BoE kept interest rates at 4.5%, as widely expected.

·      Hawkish Tone: Only one member voted for a rate cut, reinforcing a cautious stance.

·      GBP Reaction: The pound gained slightly as markets adjusted expected rate cuts for the year from 55bp to 45bp.

·      Market Sentiment: Gains were short-lived, indicating that markets are comfortable pricing in only two rate cuts this year.

Today’s Rates

Today's Interbank Rates at 11:25 am against GBP movement.

GBP>EUR – 1.1940

GBP>USD – 1.2943

EUR>GBP – 0.8374

EUR>USD – 1.0839

GBP>CAD – 1.8554

GBP>AUD – 2.0574

GBP>SEK – 13.063

GBP>CHF – 1.1401

GBP>PLN – 5.0077

GBP>AED – 4.7533

GBP>HKD – 10.060

GBP>ZAR – 23.550

Today’s Key Takeaways

·       GBP Under Pressure: The pound weakened following reports that UK borrowing forecasts for this fiscal year will overshoot by £20bn, underscoring the fragile state of public finances.

·       Spring Budget Impact: Chancellor Rachel Reeves is expected to announce billions in public spending and welfare cuts on March 26, which could further weigh on economic sentiment.

·       Market Outlook: With limited key events scheduled, market activity is expected to remain subdued for the rest of the day.

21st March 2025

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