The pound has fallen significantly against the euro but is stronger against the dollar following the Bank of England’s decision to increase interest rates.
The BoE raised rates from 0.50% to 0.75% to try and tackle the rising cost of living in the UK after predicting that inflation could rise to around 8% later this year.
Monetary Policy Committee (MPC) members voted 8-1 in favour of this 25 point rate hike; however, the Bank issued cautious guidance around future hikes, saying that the market’s expectation for the Bank Rate to reach 2% by the end of the year was extreme. This caused markets to re-evaluate, sending sterling lower.
It’s a quiet day for data releases today but the UK’s latest inflation figures will be released on Wednesday next week. Markets continue to eye the Russia-Ukraine situation.
