GBP holds well. Overview for 07.02.2023
The British pound against the US dollar remains weak but does not go lower. The current quote is 1.2050.
To fight with inflation, the Bank of England may lift the interest rate again, The Guardian says. Britain is still living through the consequences of the pandemic, the effect of Brexit, the energy shock, and the logistic issues.
This is the actual situation. London feels total economic pressure, with previous links working poorly and new ones have not formed yet. Due to supply issues, food inflation started growing faster. At the end of December, the CPI amounted to 10.5% y/y. Daily life costs too much, affecting millions of British households.
In February, the Bank of England lifted the interest rate by 50 base points to 4% a year. This is the peak since 2008.
The rate may definitely be above 0.50-1.00%.
This week, the pound waits for an industrial production report for December and a prelim GDP for Q4. If the GDP indeed stopped falling at the end of the year, the GBP will grip a foothold.
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