This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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.