The FTSE 100 spiked higher by 0.13% within the first five minutes of the Bank of England (BoE), deciding to leave the rate unchanged at 0.75%. Economists were not anticipating a change in interest rates. Yet, if we look at the details, the Bank of England has undoubtedly taken a dovish shift, as two out of nine members voted for a rate cut.
The dovish move caused the GBPUSD pair to spike lower, and at the time of writing, the GBPUSD was trading 40 pips above the October 24 low of 1.2789. A break to the October 24 low, will most likely turn the trend bearish for the British Pound, and this should boost the FTSE 100.
A rate cut, if it happens later in the next few months should also help FTSE 100 firms focused on the domestic market as it might help to bring back growth into the UK economy. The second-quarter GDP growth was negative 0.2%, and leading indicators like the UK Services PMI and Manufacturing PMI, indicate that the weak economy extended into the third quarter.