Pound drops after Bailey comments
The pound was trading lower and it extended losses following Bank of England governor Andrew Bailey’s comments on growth deceleration and warned about the impact of commodity price swings. The Ukraine situation has pushed energy prices sharply higher (likely the largest increase since the 1970s), with growth and employment expectations skewed to the downside, the fear of stagflation (recession-inflation) in the near term exists. The Bank of England will likely see a decreased need for aggressive rate hikes and as such the markets anticipate a 1.25% increase by year end compared to 1.75% previously. Overall Sterling confidence remained weak with a retreat to 1.3075 against the dollar while the Euro strengthened to 1.1930.
Sterling edged back towards 1.3100 against the dollar at market open, although overall UK sentiment remained fragile with the Euro around 1.1910.