BoE Considering Biggest Rate Hike In Over 25 Years
Last week saw the Pound rally to reach three month highs against the Euro. Further gains however could be limited in the days ahead owing to uncertainty around the outcome of Thursday’s Bank of England (BoE) interest rate decision. That being said, the biggest rate rise in 25 years is also not being ruled out.
Andrew Bailey, the BoE governor, made it clear that while a 0.5 percentage point increase in interest rates was not locked in, it would be among the choices on the table when the monetary policy committee made its policy decision.
Sterling benefited greatly last week when the single currency came under pressure amid intense market focus surrounding European gas supplies. The issue still being 40% of the gas used in mainland Europe is being supplied by Russia and with Moscow in protest over sanctions relating to their invasion of Ukraine, they are now restricting and even halting much needed supplies into the area.
In level terms, GBP/EUR opens this morning circa 1.1920 with EUR/USD operating back above the 1.02 region. Cable (GBP/USD) also starts the week firmer and above the 1.22 level.
Datawise, a quiet start to the week with the only release of note is from across the pond. In early afternoon, we see the release from the ISM Manufacturing PMI. A good indicator of economic health which could cause added volatility should the reading either beat or miss expectations.