The Pound has been facing an uphill battle ever since the BoE indicated that the rates might not go up in May. Yesterday, the BoE’s MPC voted 7-2 in favour of leaving the interest rates unchanged, leaving them at 0.5%.
The majority of members state that, in order to determine whether the “softness in the first quarter might persist”, they need to analyse how the data unfolds in the months to come. This suggests that there is a chance that interest rates will rise in the month of August or November.
The governor of BoE, Mike Carney too, is optimistic that the rate could rise if the UK economy bounces back from a weak first quarter- which grew by a mere 0.1% (the slowest in more than five years).
The weakness of Q1 led BoE to reduce its growth estimate for this year, from 1.8% (forecasted in February), to 0.4%. However, many of the MPC members think that the weak data revealed was just a momentary lapse in an otherwise strong performance of the UK economy.