GBP
The Bank of England will deliver another bumper 50 basis points increase to borrowing costs next month.
The Bank’s mandate is to have inflation at 2% and reach 11.4% in the fourth quarter, higher than the 10.2% predicted last month. BoE has said it would peak at 13.3% in October, the highest since 1980.
Soaring inflation largely driven by rising energy costs, alongside issues surrounding Britain’s departure from the European Union and disrupted supply chains exacerbated by Russia’s invasion of Ukraine, has led to a cost-of-living crisis.
Elsewhere, there are no major releases due for the UK Beyond today, however, it is a busy week for UK data releases with the latest labour market and inflation prints due early on Tuesday and Wednesday respectively.
s reached the highest level since November 2020 as energy shortages threaten to drive already record inflation higher still.
Inflation is now expected to average almost 8% in 2022 (Around four times the European Central Bank’s goal) and 4% next year.
USD
A key factor behind the improvement in risk appetite was inflation data from the US economy. The data showed an unexpected easing in inflation in July for both the consumer and producer sides of the economy.
This included the headline CPI rate falling to 8.5% down from 9.1%. Accelerating inflation from already elevated levels and the associated sharp rise in rates from the Fed has been a significant co ern to market sentiment since the start of the year.
The coming week sees a host of US economic activity data that will provide further insights into current economic conditions and whether GDP is likely to rebound in the second half of 2022 after falling in the first two quarters.
EUR
The risk of a eurozone recession has reached the highest level since November 2020 as energy shortages threaten to drive already record inflation higher still.
Inflation is now expected to average almost 8% in 2022 (Around four times the European Central Bank’s goal) and 4% next year.
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.