GBP The Bank of England on Thursday predicted that the U.K. will fall into a recession in the final quarter of this year as it announced its steepest rate hike in nearly three decades, following similar moves by the central banks of the Eurozone and the U.S. as all of them attempt to clampdown on runaway inflation. The Bank of England raised interest rates by 50 basis points its sharpest hike in 27 years to 1.75%. The central bank also warned that inflation in the U.K. could rise to 13% by the end of the year, worsening the country’s already severe cost of living crisis. Following yesterday’s decision to step up the pace of monetary policy tightening, with the BoE deciding to raise the Bank Rate by half a percentage point, markets will be watching today’s event for clues over whether the next meeting on September 15th could see a similar move. USD Today, the US labour market report for July is due. Payrolls, which have been growing at a robust pace of 450k on average so far this year are forecast to rise by 250k in July. Meanwhile, the unemployment rate is projected to be unchanged at 3.6%. Barring any major surprise though, the data may not impact the dollar. In his press conference following the US central bank’s latest decision to raise interest rates, Fed Chair Powell described the labour market as still strong and played down the significance of recent rises in jobless claims. EUR Inflation still rising across European countries due primarily to rising energy prices. Inflation in the euro area was up to an all-time high of 8.9% in July 2022, with energy prices up more than 39% year-on-year. Estonia, Latvia, and Lithuania are the European countries with the highest inflation due to a heavy reliance on foreign imports for energy. |
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