Yesterday the pound continued to strengthen against the euro. Against the dollar, sterling also strengthened.
This morning the pound is still strong against the euro and has strengthened slightly against the dollar.
The Bank of England’s latest interest rate decision will be released this afternoon. Last month, the Bank increased interest rates by 25 basis points to 1.25% – the fifth consecutive increase. Markets are now expecting a 50 basis point increase, which would bring the rate to 1.75% and would be the largest single hike in 27 years. Any surprises could spell volatility for the pound as markets have now ‘priced in’ a 50bp hike. As it stands, borrowing costs are the highest in 13 years.
Further increases are on the horizon for the UK as the central bank says inflation will likely rise above 9% in the coming months and may rise above 11% come October.