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Hardy: What to expect from the Bank of England
Get used to UK interest rates staying at 0.5% for the rest of the year; so says John Hardy, Saxo Bank's Head of FX Strategy. The Bank of England starts a two-day meeting today, Wednesday. Rates have been held at a record low since March 2009. John says the market has been "aggressive" in trying to time when any rate hike might happen but he's not expecting any change until next year.
The British economy has surprised many by the strength of its recovery but John says we need time to see whether that recovery can be sustained. The Bank of England has said that it will only consider raising rates when unemployment falls to 7% but many now believe that threshold will be passed sooner rather than later. There's speculation it could revise its forward guidance after this week's meeting.
The pound has strengthened in recent months and John says it's set for a strong year, but he says it looks to be a little over-valued against the US dollar right now not least because he feels the greenback is undervalued. It's likely to do better against the euro, he suggests.
01:18 minutes
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