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Mon, Apr 15, 2024

BOE Struggling to Control Inflation Amid Interest Rate Hike
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GBPUSD is moving in the Descending triangle pattern and the market has reached the lower high area of the pattern.

On Thursday, the Bank of England (BoE) is anticipated to raise interest rates for the tenth straight time, dealing mortgage holders another hit. The financial markets anticipate that the base rate of the central bank will rise by 0.5 basis points to 4%, which will be its highest level since the global financial crisis of 2008. This would be the ninth consecutive increase in interest rates that the Bank of England has implemented since it began tightening policy in December 2021, adding to the pressure that is already being placed on homeowners.

Mathew Ryan Review

As the head of market strategy at Ebury, Matthew Ryan anticipates a 50bp increase in interest rates since there is insufficient data to support an inflation trend that is moving lower. He spoke in a statement revealing the details as to why he predicts that this will take place.

EURGBP M30 TF analysis Market is moving in an Ascending channel and the market has fallen from the higher high area of the channel

EURGBP is moving in an Ascending channel and the market has fallen from the higher high area of the channel

“Since the December meeting, we think that macroeconomic news out of the UK has mixed ramifications for monetary policy. However, on balance, we are penciling in another 50bp rate increase this week. The focus among committee members clearly remains on inflation, and, as of yet, we are yet to clear evidence of a downward trend in either the headline or core CPI measures.”

Bank of England rate hike.

“A significant fall in gas prices, lower market interest rate expectations, and an economy less weak than expected should cause the Bank of England to dial back on the downbeat economic outlook of its last forecast when it presents new projections on Thursday. Stubborn core inflation and strong pay growth mean another 50 basis points rise in bank rate is likely. But the EY ITEM Club thinks this increase could prove the end of the current rate-rising cycle.”

Huw Pill Speech

Huw Pill is the Chief Economist at the Bank of England. He explains that while many countries are facing some economic challenges, the UK is unusual in facing all of them at once. But the Monetary Policy Committee is acting to bring inflation back down in the years ahead.

“In both the UK and the US, the labor market has remained tight. The UK unemployment rate recently reached its lowest level since the mid-1970s. Recruitment difficulties in a tight labor market have supported stronger underlying wage growth. The relative contributions of demand and supply to labor market tightness are a topic of intense debate.”

GBPCAD Weekly TF analysis Market is moving in the Descending channel and the market has reached the lower high area of the channel

GBPCAD is moving in the Descending channel and the market has reached the lower high area of the channel.

“In the US, demand has played an important role: the US economy has more than recovered pre-pandemic levels of activity. So there are grounds for seeing US labor market tightness as a symptom of ‘overheating’ in the broader economy. This case is harder to make in the UK, where aggregate activity has still to regain pre-pandemic levels on the latest vintage of data. As a result, adverse supply effects seem to play a larger role in Britain.”

Economic Crisis

As the cost of living continues to put pressure on families, the International Monetary Fund predicts that the economy of the United Kingdom will contract and perform more poorly than that of other major nations, including Russia. The International Monetary Fund forecast that in 2023, the global economy will decrease by 0.6% rather than rise modestly as was previously anticipated.

GBPCHF Weekly TF analysis Market is moving in the Descending channel and the market has rebounded from the lower low area of the channel

GBPCHF is moving in the Descending channel and the market has rebounded from the lower low area of the channel.

The International Monetary Fund, whose mission is to promote economic growth stability, recently announced that it had lowered its forecast for the United Kingdom (UK) due to the country’s high energy prices, rising mortgage costs, and increased tax rates, as well as its ongoing worker shortages.

Britain currency gbp with economic charts

In its study, it did not identify Brexit as a factor that would explain why the UK did not do as well as other countries. It has been three years since the United Kingdom officially exited the European Union. It is anticipated that the United Kingdom will be the only advanced or emerging economy in the world to experience economic contraction in the next year. Even Russia, which has been hammered by sanctions, is now expected to increase this year. If a nation’s economy is contracting, it is common practice for businesses to report lower profits and an increase in the number of jobless individuals.


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