It wasn’t so much the widely expected 75 basis-point rise in interest rates – the largest for 33 years – that has sunk the pound, as the Bank’s warning of a two-year recession and doubling unemployment. There was also the lowering of expectations for peak interest rates from almost 6.5% after the mini-Budget to under 5% now.
So, a chilling week for sterling ends with the pound close to 2% weaker against the euro than on Monday and just over 3% down on the US dollar.
Compared to expectations in the wake of the mini-Budget, the increase in interest rates to 3% was seen as dovish by some, although two of the nine-member MPC voted for a smaller rise.
Elsewhere in the business news, Elon Musk has started mass layoffs at Twitter. Indeed a report from the FT highlights job cuts in many more tech businesses. This afternoon, US hirings are expected to fall in non-farm payrolls.
Also in the US, in a speech yesterday Donald Trump made it clear that he will “very, very, very probably” run for president again in 2024, as President Biden also seems determined to run for a second term.
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