Last week, the Pound hit a six-month high against the Euro, and an 11-month high against the US Dollar after further interest rate hikes and bullish commentary from the Bank of England boosted the Pound.
The hike was the 12th consecutive interest rate hike from the Bank of England, which has come after a long period of very low interest rates just a few years ago.
The UK’s inflation issues have been well reported, and whilst inflation is also a global issue the UK appears to be especially struggling with bringing the above 10% inflation levels down.
The increasing interest rate has no-doubt made the Pound a more attractive currency to hold funds in, and this has helped strengthen the Pounds value.
With the rate hikes expected to end later this year, market commentators are expecting just one further hike up to 4.75% before potential cuts next year. The Pound could potentially drop so it’s worth following the BoE’s updates for insights into the Pound’s next moves.
UK avoids recession with growth now expected this year
Our regular readers will be aware of the Pounds recent gains against most major currency pairs. The gains are not just down to rate hikes from the Bank of England, but also a complete turnaround in expectations for UK growth this year as well as in 2024.
The Bank of England had expected to see a recession this year. As recently as February there were expectations of a 0.5% contraction in growth through 2023, but since then the bank has pivoted and now expects to see growth of 0.25% in 2023, and 0.75% in 2024 and 2025.
These predictions are slightly above the International Monetary Fund’s consensus for the UK economy. If the UK exceeds expectations, it wouldn’t be unusual to see the Pound make further gains.
Whilst economic data out of the UK is light this week, there will be some speeches from key market figures to look out for. The governor of the BoE, Andrew Bailey will be speaking tomorrow morning at 10.50am and then on Thursday the BoE Monetary Policy Report Hearings will be released.
If you wish to be updated in the event of a big market movement for the Pound, do feel free to register your interest with us. As a market leader in the international payments sector, we can also offer you quotes if you plan on making a currency transfer in future.
You can contact me (Joe) directly on [email protected] with an outline of your plans and I’ll be happy to offer insight and exchange rates.
