In a similar story to this time last week, Governor at the Bank of England Andrew Bailey provided yet another huge hint as to the outlook for the central bank and plans to raise the interest rates from the current record lows. During an online panel speech, the Governor again addressed rising inflation concerns in the UK economy where the BoE has forecast inflation rising to over 4%, which is well above the 2% target. Again, reiterating the bank “will have to act” the UK could be the first major economy to raise rates following the Covid pandemic. Although it feels as though we have been banging the same drum for a while now, this would be a huge step forward following some periods of concern over the previous 18 months.
This has given sterling the freedom to move north against the euro, after gaining 0.75% through the course of Friday. These are clear of the yearly high we saw at the start of August and you would have to go back to the end of day on the 26th February 2020, as GBP-EUR plummeted nearly 4.5% over the course of 4 trading days.
The economic calendar is looking light this week; however, inflation data will be brought further into the spotlight on Wednesday. CPI figures are released early in the morning and sentiment will be different compared to September last year, when the UK was still living under Covid restrictions.
Have a great day.
Author: Jack Nicholls, Senior Relationship Manager.
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