Bank of England

Bank of England Governor Bailey has delivered an upbeat speech in which he says inflation will fall sharply by year-end and that the economy is performing better than expected.

The Bank of England (BoE) announced the most significant upgrade to its economic outlook for a quarter of a century this week but scope for further optimism about UK growth prospects is limited by residential mortgage costs that could soon swallow two-thirds of take-home pay for some borrowers.

The British Pound rose sharply in an initial reaction to news the Bank of England has raised interest rates by a further 25 basis points and upgraded its GDP growth forecasts.

The Pound to Euro exchange rate entered the new week trading back above 1.14 and may attempt to rise further in the days ahead but this Thursday's forecast update and interest rate decision from the Bank of England (BoE) are both wild card risks that could cut either way for Sterling.

Risks stemming from next Thursday's Bank of England interest rate decision are to the downside for Pound Sterling.

The resilience of the UK economy has taken many forecasters by surprise but risks keeping inflation higher than otherwise and over a protracted period of time, according to economists at Goldman Sachs, who say the Bank of England (BoE) is now likely to raise Bank Rate to 5% as a result. 

Bank of England (BoE) Chief Economist Huw Pill caused controversy this week when saying everybody must accept being poorer due to inflation but this wouldn't have been so if he also explained how inflation risks taking food directly from the plates of people in some of the world's very poorest countries. 

Bank of England (BoE) Chief Economist Huw Pill drew the ire of market pundits, media commentators and members of the public alike this week with the publication of controversial remarks suggesting Britons should just "accept that they're worse off," due to inflation, and below is the fanmail. 

Pound Sterling outperformed many other major currencies in the opening months of the year and remained buoyant through much of this week but there are two reasons why Bank of England (BoE) interest rate policy might now be an asymmetric risk on the downside for the months ahead. 

TS Lombard says two more Bank of England interest rate hikes are possible in the first half of 2021, and that the risks of a policy mistake are also growing.

"On balance, the committee probably becomes slightly more hawkish with Ms Greene’s appointment."

The odds of the Bank of England raising interest rates again in May are rising says Oxford Economics, an independent research consultancy and provider.

The Bank of England's Chief Economist warned it could still be too soon for the Bank of England to pause its interest rate hiking cycle.

There are concerns that the banking scare could lead to a more risk averse attitude among lenders, adding another squeeze to liquidity, just as companies are grappling with high interest rates.

Pound Sterling was trading around the middle of the major currency rankings for the period in the final session of the week but with little help from the Bank of England (BoE), which drew mixed responses from analysts and economists when announcing its latest interest rate decision on Thursday.

The Bank of England raised Bank Rate 25 basis points to 4.25%, its highest level since 2008, and said it would raise interest rates again if required.

Recent data have confirmed that UK inflation and its underlying drivers are moderating but economists and markets remain split over what to expect from the Bank of England (BoE) next week with some suggesting it could elect to leave interest rates unchanged for the first time in more than a year.  

Pound Sterling could come under pressure if the 'hawkish' tones coming from the Fed and ECB are not yet digested, says Mann.

GBP retreats on Bank of England Governor's speech.

The Bank of England must continue hiking interest rates and avoid a pivot as UK financial conditions have eased warns Catherine Mann.