-The bank recently upgraded their inflation expectations to above 4% by year-end.
The GBP to EUR trades above the 1.1700 with the yearly highs above 1.1800 and will see German consumer numbers released today.
Bank of England sees higher rates due to inflation
BoE governor Andrew Bailey told the Society of Professional Economists on Monday evening that “all of us (in the MPC) believe that there will need to be some modest tightening of policy to be consistent with meeting the inflation target (of 2%) sustainably over the medium-term.”
The Governor said he was monitoring the situation, but he remains of the belief that many of the inflationary pressures are transitory. ECB President Christine Lagarde echoed the same word a day earlier as she talked of the eurozone price pressures.
Bailey said the economy was still in the recovery phase after the pandemic and that there were still ‘hard yards’ ahead.
“It is a saying that originated in sailing, though I associate it more with forward play in rugby,” he said.
“I, and other MPC members, have also used the analogy of a bridge to describe the role of economic policy… the bridge to the other side of Covid-19.
“We are still on that bridge.”
UK fuel prices rise to eight-year high on shortages
Adding to the current woes over pricing, the UK has seen fuel prices reaching their highest level in eight years due to the recent shortages.
Wholesale energy prices are rising alongside that, with nine UK gas companies facing bankruptcy in the last weeks.
Figures from the RAC showed the average price of a litre of petrol rose from 135.9p on Friday to 136.6p on Sunday, the highest level since September 2013.
Figures from Experian Catalist said average diesel prices rose from 138.0p a litre on Friday to 138.6p on Sunday. However, the AA said drivers and businesses would be hurt most by a 5p rise in the wholesale price of diesel since early September.
“When it comes to pump prices, it is a pretty bleak picture for drivers. With the cost of oil rising and now near a three-year high, wholesale prices are being forced up, which means retailers are paying more than they were just a few days ago for the same amount of fuel,” said Simon Williams, the RAC’s spokesperson.
The problems in the fuel market were caused by BP’s closure of retail pumps due to the ongoing shortage of HGV drivers in the UK. The government was fast-tracking up to 10,000 temporary visas for European drivers to help the country.
The GBP to EUR has been fluctuating recently but the Bank of England’s acceleration to higher rates should support the pound sterling in coming sessions.