GBP/ZAR Exchange Rate Rises, UK Election Campaign Officially Underway

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Today's forecasts represent the first time that the Bank has modelled the potential impact of Mr Johnson's Brexit deal on which he is fighting the general election.

In a widely expected decision, the Bank of England's Monetary Policy Committee held the policy rate unchanged at 0.75%.

The rate-setting committee has been reluctant to move interest rates for over a year given the huge uncertainty surrounding Brexit.

As a whole, the committee signalled that it was more willing to take measures to stimulate the United Kingdom economy "if global growth failed to stabilise or if Brexit uncertainties remain entrenched".

Carney said he is expecting a deal to be approved, allowing Britain to leave the European Union by January 31. However, there were two members of the MPC that voted to cut rates.

"This will no longer go ahead as the Cabinet Secretary has concluded that this would not be consistent with the Cabinet Office's general election guidance, ” the Office for Budget Responsibility said in a statement".

Nonetheless, during the presser, BoE Governor Mark Carney indicated that while a reduction in Bank Rate might be needed in order to provide reinforcement to the economy should downside risks emerge, the MPC was not pre-committing.

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The central bank said that if Parliament ratifies Mr. Johnson's Brexit deal and the government inks a free-trade agreement with the European Union similar to the bloc's pact with Canada, then the economy would notch up slow but steady growth in the years ahead.

The two members who voted to cut interest rates, Michael Saunders and Jonathan Haskel, are both external members of the committee.

US-China trade developments will also remain in focus, and with any indications that the world's two largest economies can make a concession on a "Phase 1" trade deal this month could boost optimism in the Eurozone's economy, which relies heavily on global trade stability.

The main opposition Labour Party wants to renegotiate Johnson's deal to ensure closer ties and then put it to the people in another referendum, with an option to remain in the EU.

Prime Minister Boris Johnson's Conservatives confirmed an end to a decade of belt-tightening with new plans to borrow to invest, while attacking the rival Labour party for pledging even greater largesse. As expected, it kept the UK Bank Rate at 0.75%.

In its latest Quarterly Inflation Report (QIR), the Bank of England (BoE) announced that the Gross Domestic Product (GDP) in 2019 is now expected to grow 1.4%, slightly higher than the 1.3% announced in August's QIR.