Bank of England and UK Unemployment-Will Sterling rise against the Euro & US Dollar?

Bank of England due to hike interest rates but by how much?

With the Bank of England already having hiked interest rates many times during 2022 there is a strong likelihood of another interest rate hike coming next week.

The Bank of England are likely to announce an interest rate hike on Thursday 15th December. This would involve raising the base rate to 3.5% from the current level of 3%.

The UK inflation rate has recently hit a 41 year high and currently inflation sees little signs of slowing down.

With the UK heading for recession and the cost of living causing over 8 million people to be experiencing fuel poverty it is a difficult time for the central bank.

At the previous meeting, BoE governor Andrew Bailey suggested that further interest rate hikes are needed.

Therefore, I fully expect to see at least 0.5% at next week’s meeting.

However, there is also a chance that we could even see interest rates going up by 0.75% which could cause the Pound to rise against both the Euro and the US Dollar.

In theory, Sterling would become more attractive to hold owing to its higher than expected yield.

With inflation sitting at 11.1% during October, which is the highest level seen since 1981, this is way higher than the Bank of England’s inflation target level of just 2%.

Therefore, be prepared to see a minimum of 0.5% rate hike or even a 0.75% movement.

Will UK unemployment cause Sterling to move?

As we move into next week the UK will announce its latest unemployment figures as well as Average Earnings data.

This will provide us with an insight into the health of the British economy.

The expectation is for 3.6% unemployment so anything different could cause some volatility for Sterling exchange rates during the early part of next week.

If you would like further information or a free quote when buying or selling currency then please do not hesitate to contact me.

I have worked for one of the UK’s leading currency brokers for 19 years and would be more than happy to hear from you.

Tom Holian [email protected]