Pound falls after decision Bank England
2022.12.15 07:56
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Pound falls after decision Bank England
Budrigannews.com – Short-dated UK government bonds edged higher after the Bank of England as the economy enters a recession, extending the pound’s losses.
after the decision, fell as much as 1.1% to $1.2288, and the gilt yield fell 9 basis points to 3.21 percent. Following an unprecedented 75-basis point increase in November, the BOE increased rates by 50 basis points, as was widely anticipated.
Officials were attempting to strike a balance between the risk of inflation becoming entrenched and overstretching on growth when the nine members of the Monetary Policy Committee divided on the decision.
More Dollar continued to fall under pressure
Valentin Marinov, a Credit Agricole FX strategist, stated, “The voting split suggests that this is a dovish rate hike with two MPC members voting for unchanged.” As investors adjust their BOE rate expectations for 2023, the GBP may continue its recent correction lower.
By August, interest rates will rise to 4.54%, down from 4.61% prior to Thursday’s decision, according to bets made by traders in the money market.
The BOE’s decision comes a day after the Federal Reserve increased interest rates by half a percentage point and indicated that borrowing costs will likely rise more than investors anticipate next year. Later on Thursday, the European Central Bank is also expected to raise rates by 50 basis points.
Friday at 6 p.m., the BOE will issue a market notice outlining the operational arrangements for the first quarter of 2023 and the progress of gilt sales under its quantitative tightening program.
