BoE raise rates by 25 basis points
Friday 12 May, 2023
Daily Currency UpdateAll eyes were on the BOE yesterday and they delivered as expected, raising the bank rate by 25 basis points. There were some optimistic elements to the decision, as they bumped up projections on inflation and also GDP forecasts. The bank of England is now not looking for a UK recession which gave the pound some support in the aftermath of the decision.
UK Inflation is expected to remain higher for longer than previously forecast. The headline rate of inflation has been high in recent months and was 10.1% in March. That is the highest rate in the G7 group of advanced economies and well above the Bank’s official inflation target is 2%.
Key MoversThe US dollar surged on safety flows yesterday, with the greenback coming in as the strongest of the major currencies, but not due to stronger economic data.
US data releases yesterday saw a decline on both core & headline figures; the year-on-year print for April revealed a 2.3% increase compared to expectations of 2.5% and down from last month’s 2.7%. Core PPI printed 3.2% against expectations of 3.3% and is down from the prior 3.4%.
- GBP/USD: 1.2505 - 1.2575 ▲
- GBP/EUR: 1.1405 - 1.1475 ▲
- EUR/USD: 1.0885 - 1.0945 ▲