Nordine NAAM, Research Analyst at Natixis, explains that while there were rumours two MPC members of BoE would vote for an interest rate hike, this proved unfounded.
“There was no change from the previous meeting, with the Committee voting by a 7-1 majority to keep the bank rate on hold. This clearly disappointed the market, in turn weighing on sterling, even though the Bank of England hinted that a monetary tightening could occur earlier than expected by the market if the Brexit effects prove limited. However, the latest figures have revealed a sharp slowdown in industrial production. After growing by almost 4.3% year-on-year in December, industrial production declined by 0.5% month-on-month in March. Next week, watch out for consumer prices (expected to show an increase of 2.6% in April), retail sales and the labour force survey. In this context, the EUR/GBP could recover temporarily towards 0.8325 if these publications are good.”