Home Daily Commentaries More rate hikes likely needed says Bank of England Deputy Governor Ramsden

More rate hikes likely needed says Bank of England Deputy Governor Ramsden

Tuesday 9 August, 2022

Daily Currency Update

The Bank of England's Deputy Governor Dave Ramsden has indicated that more interest rate rises will be needed in an effort to tame inflation that is at a 40-year-high. In an interview with Reuters, Ramsden stated: "For me personally, I do think it's more likely than not that we will have to raise the Bank Rate further. But I haven't reached a firm decision on that." Members of the Banks Monetary Policy Committee seem determined to get prices under control even if it leads to a recession, and Ramsdale seems to be preparing the markets for another hike at its next meeting on September 15th. We will get the first idea of whether the UK economy is heading into recession on Friday when the first estimate of second quarter growth data is released. A quarterly drop of -0.2% is expected, however as usual anything much higher or lower will likely move the pound. That aside it's a quiet week from the UK with little data of note, so until Fridays GDP figure its likely external factors will be the main driver of sterling. GBP/USD is at 1.2070 with GBP/EUR at 1.1835.

Key Movers

This week's main event is Wednesday's latest inflation figures from the States, with the Consumer Price Index year-on-year finally expected to fall from its multi decade high of 9.1% down to 8.7%. If this comes to fruition then it means that price rises are still well above the Federal Reserve's 2% target, however it will offer hope that Americans are through the worst of the soaring inflation, that much of the world is experiencing. Similar to the UK, it looks almost certain more interest hikes are needed, and the Fed will want to see consecutive falls in inflation before it takes it foot off the pedal regarding tightening monetary policy. The end of the month sees the annual Jackson Hole Economic Symposium in Wyoming, and many are expecting some up-to-date commentary from Fed Chairman Jay Powell on where he sees the future path of interest rates at the two-day event. This week is another quiet one in the Eurozone, so news related to energy supplies from Russia to the Bloc will likely be the main domestic news that moves the shared currency. EUR/USD trades around 1.02.

Expected Ranges

  • GBP/USD: 1.2000 - 1.2120 ▼
  • GBP/EUR: 1.1790 - 1.1900 ▼
  • GBP/AUD: 1.7270 - 1.7420 ▼
  • EUR/USD: 1.0140 - 1.0290 ▲