Bank of England interest rate decision in December
Monday 22 November, 2021
Daily Currency Update
GBP - British Pound
GBP/USD has slipped from highs of $1.37 to just above $1.34 in the space of 3 weeks. Most of this move is due to US dollar strength. It has strengthened amid global uncertainty in part caused by COVID-19 and supply chain issues. Investors tend to move to the safe haven US dollar during times of uncertainty. The unexpected decision from the Bank of England to keep interest rates the same also caused some pound weakness. Having said that, the Bank of England could raise interest rates in December’s meeting, which will likely be positive for the pound, as the Bank of England look to tackle rising inflation.
The pound also remains under pressure due to Brexit, as growing concerns around the potential implementation of Article 16, and the increasing likelihood of an EU-UK trade war, keeps the pound anchored to the downside.
Key MoversThe euro continues to feel the pressure, as central banks such as the US Federal Reserve and Bank of England are looking to potentially hike rates, or taper quantitative easing. Both the Fed and Bank of England have plans to raise interest rates significantly by the end of 2022, whilst the European Central Bank have consistently poured cold water on the idea, suggesting that inflation is transitory and will likely be resolved, without having to be artificially manipulated. Alongside this, the number of COVID-19 cases in Europe continues to worry authorities, and localized lockdowns continue to be implemented, most recently in Austria.
- GBP/USD: 1.3380 - 1.3540 ▼
- GBP/EUR: 1.1830 - 1.1960 ▲
- GBP/AUD: 1.8455 - 1.8640 ▼