Bank of England Takes Dovish Route to Rate Hike

The Bank of England’s nine rate-setters on the Monetary Policy Committee voted 7 to 2 to raise the key interest rate to 0.50% from 0.25%. It was the first hike since 2007, before the global financial crisis shoved the UK into a vicious recession.

However, investor attention was primarily focused on the BoE’s caution towards subsequent moves, after the Central Bank commented that any further increase would be "gradual" and to a "limited extent."

In a press conference following the announcement, Governor Mark Carney said policymakers would re-evaluate the economic outlook once it had more clarity on the country’s relationship with the European Union post Brexit.

The Sterling tumbled by the most in five months against a basket of major currencies on Thursday, helping FTSE 100 futures rally almost 1.50% during the session.

Factories across the Euro Area are recording their best year since the start of the century according to a closely-watched survey, with manufacturing struggling to keep pace with robust demand despite firms hiring staff at the fastest rate in almost 20 years.

Markit’s final Eurozone Manufacturing PMI rose to 58.5 in October from the prior month’s 58.1. The figure was marginally below a preliminary estimate of 58.6 but remained at its highest level since February of 2011. The new orders sub-index accelerated at its quickest pace since early 2011, while factories accumulated backlogs of work at the steepest incline since Markit started conducting the survey 15 years ago.

In a bid to fulfil growing demand, manufacturers hired staff rapidly, with the employment sub-index coming in at 57.3, up from September’s 56.5. EURCAD is stuck within a narrow range around 1.4930 in Friday Asian trade.