Super Thursday Not All That Bad for the Pound (In the End)

The biggest surprise of Super Thursday was that only one MPC member voted for a rate hike instead of the 2, or even 3, that were expected to raise their hawkish hand.

This was a bit of a shock for the pound, which had spent the morning waiting for a steroid-injection from the central bank, causing sterling to see notable losses against the euro and the dollar.

The FTSE, on the other hand, received a bit of a boost, even if it couldn’t fully overcome the drag caused by the truly dreadful form of the mining sector as the day went on.

Things became a bit more complicated when you look beyond that headline-grabbing vote, however.

The recent commodity woes have caused a soft short-term inflation outlook, with 0% expected for the next 2 months, but with the Bank forecasting that it should eventually reach (just over) 2% by the end of its 2 year target period.

Carney also commented that the UK is not in a ‘debt fuelled consumer recovery’, whilst clarifying his mid-July claim that rates would be raised around the turn of the year, stating it was his opinion alone, not that of the MPC as a whole.

The pound probably could have done with that clarification a bit earlier than after the official bank rate votes were announced, but oh well.

With the UK’s growth forecast also raised from 2.5% in May to 2.8%, the overall tone of this first Super Thursday was more hawkish than the vote suggested, but less gung-ho than many had predicted.

Either way, Super Thursday didn’t really lead to the transparent clarity it was supposedly engineered to produce.