While the markets were fully priced for a rate cut, the additional measures saw the pound dive 1.7%.
BOE governor Mark Carney’s assessment of the post-Brexit UK economy was very negative, predicting the unemployment rate will rise from 4.9% to 5.5% over the next two years despite the new stimulus. This makes it very likely that further cuts to the policy rate and expansions of the BOE’s other easing measures will be forthcoming over the coming months, providing further downside risks to the pound provided US economic activity does not begin to steadily weaken.
The main focus for the UK is what sort of fiscal stimulus package new Chancellor Phillip Hammond announces at his “Autumn Statement”. It’s safe to say former Chancellor George Osborne’s many years of austerity policies are set to be dramatically reversed.