The pound has strengthened further against the euro, trading around a two-month high, and has surged against the dollar. Sterling climbed around 1.5% against the greenback over the course of yesterday following the announcement of the Federal Reserve’s latest interest rate decision.
News that Russia has cut gas supplies to Germany and other European countries has sent the euro lower and has boosted the pound. Nonetheless, this squeeze on Europe’s gas supplies will have a knock-on effect on British energy bills which are forecast to hit £3,850 annually.
The pound is also being supported by hawkish bets around the Bank of England’s next interest rate decision. Markets have almost fully priced in a 50 basis point hike in August and expect the rate to be at 2.25% by the end of the year.
