Bank Of England raise interest rates again

By Ashley Finill

This week has been a busy week in the currency market as we have seen several key data releases which has continued to flare up volatility in the markets. Sterling has had an up and down week against both the Euro and the Dollar but the Pound being down on both overall losing nearly a cent on both the majors. All eyes were looking to yesterday though as the Bank of England monetary policy committee once again voted in favour of again increasing the interest rate in the UK by 0.25%. This is the 14th consecutive rate increase by the BoE since December 2021 to help bring down the high levels of inflation still being seen in the UK economy. This is great once again for savers but those with mortgages will feel the brunt with the cost of living in the UK still high even though inflation levels are coming down, although it could be said these drops aren’t being felt in the shops with food prices still massively inflated. The government had projected that inflation would fall to around 2% by October of this year but only two months away from the final quarter of the year inflation sits at 7.9%, nearly 6% above what was initially forecast by prime minister Rishi Sunak. The goalposts have now widely been moved by the government with the 2% target now being forecast for the 2nd quarter of 2025, a whole year and half from what had been predicted. This leaves the former Chancellor of the Exchequer and current PM Mr Sunak somewhat red faced and the 2% target may not even be welcomed by a Conservative government come 2025, with the General Election in the UK being held in late 2024. However, the current Chancellor Jeremy Hunt spoke yesterday after the announcement from the BoE and forecast that by this time next year inflations levels in the UK will be at 2.7%. Patience and trust with the Conservative government has seemingly run out, if current party polls and local elections are anything to go by, and a year from now should the economic situation not be going to plan there could be a big shake up in British politics. Should uncertainty loom, sterling negativity could once again take hold and plunge the pound down.

Remaining data this week

We do have some data left to see out the week which could shake up the market throughout Friday’s trading. Early doors, the Eurozone release retail sales figures which is expected to show a positive more figure from last month and nearly 1% up from the year-on-year figure which shows some positivity for the EU when it comes to spending money as inflation begins to creep its way back down. Should there be a contraction then we could see some support for sterling. However, this morning the Pound has dropped around half a cent againt the Euro already which could mean some pricing in ahead of the retail sales release. In the afternoon it’s over stateside as the US release non-farm payrolls at 12.30pm which gives a figure of the new jobs created in the country. Those of you with a dollar requirement it may be prudent to check rates ahead of this release as the unemployment rate is expected to be an improved figure from last month’s. At the same time Canada also release their unemployment rate which is expected to increase. As always stay in close contact with A Place in the Sun Currency for professional and friendly guidance on all your currency needs.