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BoE Eyes 2022 Rate Hike

BoE Eyes 2022 Rate Hike

The Bank of England is set to raise interest rates in the second or third quarters of 2022, according to the reaction of interest rate and foreign exchange markets to the August policy update.


The British Pound saw some volatility around the timing of the noon announcement but remains steady around levels seen over recent days, reinforcing investor expectations for a 2022 rate rise. The vote in keeping rates unchanged came in at 8-0 by the Monetary Policy Committee (MPC) whilst leaving the QE programme unaltered also came in at 7-1. 


Currency wise, the slightly firmer tone to sterling is reflected by GBP/EUR opening this morning just above the 1.1765 mark. Meanwhile, EUR/USD continues to change hands in the bottom half of the 1.18- 1.19 range with GBP/USD regaining the 1.39 handle. 


Looking towards today, the main set of data will be the US payrolls report. Having increased by 850k in June, the consensus is for payrolls to rise by 870k in July as the labour market recovery continues to gather momentum. However, there is scope for payrolls to miss in either direction due to conflicting signals from other labour market data


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