Sterling Gains as Markets Price More BoE Rate Hikes
Sterling edged up to $1.326 as investors priced in a more hawkish Bank of England stance amid renewed inflation pressures. Oil prices also rose after President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz and end the Middle East conflict. BoE Deputy Governor Dave Ramsden said Monday he would be prepared to raise rates if “upside pressures” on inflation persist, echoing recent warnings from Governor Andrew Bailey and Deputy Governors Sarah Breeden and Clare Lombardelli that higher energy prices could fuel a wage-price spiral. The MPC voted 6-3 earlier this month to hold rates at 3.75%, while warning inflation could peak around 4%. Markets now price in an over 80% chance of a 25bp hike in November, with roughly four hikes priced in by mid-next year. Meanwhile, Chancellor John Healey stressed the need for fiscal discipline ahead of next month’s budget, highlighting the rising cost of servicing the UK’s elevated debt burden and its impact on public services.
326 as investors priced in a more hawkish Bank of England stance amid renewed inflation pressures. Oil prices also rose after President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz and end the Middle East conflict. BoE Deputy Governor Dave Ramsden said Monday he would be prepared to raise rates if “upside pressures” on inflation persist, echoing recent warnings from Governor Andrew Bailey and Deputy Governors Sarah Breeden and Clare Lombardelli that higher energy prices could fuel a wage-price spiral. 75%, while warning inflation could peak around 4%.
Markets now price in an over 80% chance of a 25bp hike in November, with roughly four hikes priced in by mid-next year. Meanwhile, Chancellor John Healey stressed the need for fiscal discipline ahead of next month’s budget, highlighting the rising cost of servicing the UK’s elevated debt burden and its impact on public services.