The Bank of England has raised interest rates for the first time in a decade to contain an increase in inflation, a decision fell in line with our expectation. The central bank increased its benchmark rate by 25bps to 0.50%

Looking forward we expect rates to rise slowly and gradually, unless there is a very negative, or indeed a very positive, Brexit surprise. While it can be supportive to the equity markets, it will continue to offer little protection to cash from the high inflation. Hence, we do not see much changes. In our assessment we expect GBP/USD to average at 1.2958 for 2017 and the end period to reach around 1.2950 while our average projection for GBP against MYR for 2017 to be at 5.5533 and the end period to hit 5.6100.

• The Bank of England has raised interest rates for the first time in a decade to contain an increase in inflation stoked by the Brexit vote in what is otherwise a moment of high uncertainty for the economy. The decision fell in line with our expectation.

• The central bank increased its benchmark rate, which affects the cost of loans and savings rates in the wider economy, to 0.50% from the record low of 0.25%.

• Meanwhile we believe the impact on households and companies will likely be modest, as many home-owners are on fixedrate loans based on the historical low cost of borrowing.

• Looking forward we expect rates to rise slowly and gradually, unless there is a very negative, or indeed a very positive, Brexit surprise. While it can be supportive to the equity markets, it will continue to offer little protection to cash from the high inflation. Hence, we do not see much changes. In our assessment we expect GBP/USD to average at 1.2958 for 2017 and the end period to reach around 1.2950 while our average projection for GBP against MYR for 2017 to be at 5.5533 and the end period to hit 5.6100.

Source: AmInvest Research - 3 Nov 2017