Mark Carney and the Bank of England (BoE) did not cut UK interest rates by 25 basis points today as many had expected perhaps implying a degree of confidence in the post Brexit UK economy that many of those still preaching the Remain position have not shared.  Or perhaps just a decision to defer such a move until more data is availabel.  Doubtless the post-Brexit rises in the main UK stock market indexes will have influenced today’s decision as these would appear to indicate that financial markets have been far less disturbed by the electorate’s decision to exit the EU than many commentators might have been suggesting.

In the immediate aftermath of the Central Bank’s announcement that the base rate would be held at 0.5%, the pound jumped sharply against the dollar and was up against the euro too.  At close to a rate of $1.34 t0 the £ that is around the highest level since the end of June in the immediate aftermath of the Brexit vote decision.  On the downside the FTSE 100 index started to fall back as it had been strong in the anticipation of the additional stimulus from the BoE, and the gold price fell too – making the decline in pound sterling terms even greater.  UK gold investors might have been wise to take some profits as we had suggested a few days ago.

Bu, as noted above,  perhaps BoE confidence is not really there – at least not yet.  although the vote was 8-1 against cutting rates at this time, such a decision may only be deferred for around three weeks when the rate setting committee next meets.  By that time there will be more data available on the effects of the post-Brexit vote decision and the initial impact of any newly announced moves by the new UK Cabinet.  It is thus still widely anticipated that the BoE will cut rates then.  so the uptick in sterling, the fall in gold and in the FTSE 100 may all turn out to be premature!