Sterling turned another corner yesterday after an up-and-down sort of week.
GBP/USD ends the week close to its highest levels since last spring. Less positively against the euro, it hit a two-week low early yesterday but has been climbing since.
The Bank of England’s decision to raise interest rates by 0.25% to 4.25%, by a margin on the Monetary Policy Committee (MPC) of seven to two, was more decisive than the markets had expected and strengthened the pound against the dollar.
That has been followed this morning by positive retail sales data and a Consumer Confidence reading that was at least no worse than expected.
The rate rise was praised by chancellor Jeremy Hunt. However, other voices have been more critical, including David Blanchflower, former member of the MPC during the last banking crisis, who said the rate rise was a disastrous decision with banking already in turmoil, and that rates should be cut to 3%.
Switzerland’s central bank also raised interest rates, from 1% to 1.5%, despite the recent problems for Credit Suisse.
Following on from defeating Tory Eurosceptics with the passing of the Windsor Framework this week, Rishi Sunak is said to be looking to build the relationship with the EU, especially in relation to trade.
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