Bank of England to raise rates to combat the 40-year high inflation.

GBP

Today, we have the Bank of England policy announcement where there is a huge expectation that interest rates will be hiked by 50bps – its biggest rate hike in 27 years. The bank is expected to raise the rate by half a percentage point to 1.75 per cent in a bid to combat the 40-year high inflation. Markets have fully priced in a double rate hike, therefore anything less than this could see a GBP sell-off causing the pound to decline against most major counterparties. Should we see the Bank of England deliver on its 50bps hike, we may see a brief spike in the pound.

USD

A key measure of U.S. inflationary developments adds to evidence a peak in inflation is nearing, weighing on the Dollar at the start of August.

EUR

ISM prices index dropped to 60 in July from 78.5 in June, the market was looking for a more robust 74.3.

This is the index’s lowest reading since August 2020 and indicates the price pipeline is cooling.

If you or your company are impacted by currency risk please reach out to speak to one of our experts, we can assist with decision-making during this difficult time to help you protect your profits.