21/12/2018 – BoE Cuts Growth Forecast


During a mixed day the Pound struggled after the Bank of England cut its UK growth forecast and warned a lack of Brexit clarity is hitting the economy. The BoE said uncertainty over the UK’s departure from the EU had “intensified considerably” over the past month. They also said the economy was likely to grow by 0.2% in the final quarter of 2018, down from an earlier forecast of 0.3% after the Monetary Policy Committee (MPC) voted unanimously to keep interest rates at 0.75%.

The Bank repeated its previous guidance on how it would handle the UK’s expected departure from the EU in March. They added: “The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.” This effectively means the Bank could either raise or cut interest rates depending on the demands of its mandate to “achieve the 2% inflation target.”

The news wasn’t all bad however as retail sales jumped more than expected in November, helped by Black Friday promotions and stronger growth in sales of household goods. Official figures showed sales rose 1.4% from October despite several retailers warning of tough trading this winter.

Key Announcements

09:30 – GBP: Current Account
13:30 – USD: Core durable goods orders is expected to increase to 0.3%
13:30 – USD: Final GDP forecasted to remain at 3.5%