August 19, 2022
The BoE predicts that the UK will experience a five-quarter recession in Q4 and that inflation will peak at 13.3% in October. As a result, the British pound dropped to $1.2, closing down on a two-year low of $1.18 set on July 14th. The most recent data indicated a cooling in the labor market, particularly as the number of open positions decreased for the first time since August 2020 and earnings excluding bonuses decreased by 3% when adjusted for inflation, which was the largest decline since records began in 2001. Investors are currently anticipating inflation and retail sales data for later this week.
The probability of a half-point rate increase at the central bank’s September meeting and a total of about 125 basis points of tightening by year’s end are now estimated by the money markets to be around 83%. The BoE Governor Andrew Bailey is reportedly “open to reviewing” the mandate of the central bank following Liz Truss’ criticism of its approach to inflation, according to The Telegraph.
Source: Trading Economics
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