News | Published February 01 2020

FCA investigate pound jump prior to interest rate announcement

The Financial Conduct Authority will investigate a rise in the pound which happened directly before the Bank of England announced they would maintain interest rates at 0.75 per cent.

This investigation follows news in December that the Bank of England had admitted to accidentally leaking an audio feed of its press conferences before visual footage was broadcast.

 At the time, the Bank of England blame one supplier for “misuse” of the feed.

The audio was available between five and eight seconds before the video. While the FCA are still studying the matter, they have not launched a formal investigation.

Roughly 15 seconds before 12pm on Thursday, the value of sterling jumped from $1.3023 to $1.3089 against the dollar, with the pound also seeing a similar rise against the euro. 

At 12pm, the Bank of England announced they would maintain interest rates at 0.75 per cent. The Bank’s Monetary Policy Committee voted 7-2 to keep the rates unchanged.

The decision was made after global growth stabilised.

The pound continued to rise after the announcement but the rate of increase was smaller.

Responding to these reports, Andrew Sentence, a former member of the Bank’s MPC, told the BBC that “There is confidential information circulating in the Bank for quite a long time.” This is because the members of the committee make their decision one day before it is announced.

He warned, however, that the increase in the value of the pound may be entirely coincidental, and said “we shouldn’t jump to conclusions.”

Simon Harvey, forex analyst at Monex Europe, described “gasps around the room” when the value of the pound rose. He said: “We are not used to seeing a big jump beforehand and so it raised eyebrows.”

In response, the FCA announced: “We are aware of the incident and are looking into it.” 

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Authored by

George Salmon
Political Editor
February 01 2020

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