Read the story here. Advertise at Before It's News here.
Profile image
By Pound Sterling Forecast (Reporter)
Contributor profile | More stories
Story Views
Last hour:
Last 24 hours:

GBP EUR Drops After Bank of England Recession Warnings 

% of readers think this story is Fact. Add your two cents.

The GBP EUR exchange rate was -0.55% lower after the latest Bank of England policy meeting, which saw interest rates rise by another 25 bps. Analysts had been leaning towards a 50bps hike after recent comments from the bank’s governor, and another aggressive 75 bps move from the Federal Reserve. The smaller rate hike warned of higher inflation and a protracted recession. 

The GBP to EUR hovered at 1.1880, following resistance ahead of 1.12000. 

Bank of England predicts a UK recession later this year

The pound sterling versus the euro was lower after the Bank of England raised borrowing rates by another 25 bps. 

The Bank’s Monetary Policy Committee voted by an 8-1 margin to lift rates again, and they also warned that energy price rises could lead to inflation hitting 13%. 

The statement noted that next to the background of additional energy price increases, there were signs that inflationary pressures persisted and broadened to further domestically driven sectors. All in all, this meeting’s quicker pace of policy tightening assisted in bringing inflation back to the 2% target in the medium term, decreasing the threat of more long-lasting and costly cycles of tightening after. 

The BoE also talked of higher wholesale energy prices feeding into the retail market and said: “The United Kingdom is now projected to enter recession from the fourth quarter of this year.” 

That recession will likely drag on into the end of 2023, the most prolonged downturn since the 2008 financial crisis. The GBP v EUR is under pressure, but analysts know that Europe will be in a similar position. 

UK inflation level could hit 15% next year, says Resolution

The Bank of England had said inflation would peak at 11%. However, the central bank has been wrong over inflation like other central banks. 

The Resolution Foundation think tank said ahead of the BoE meeting that wholesale gas price rises could add to the pain for UK businesses and consumers and sees inflation at 15% next year. 

Despite another interest rate hike today, the Resolution said that the MPC faces “a protracted period of challenging policy making”. 

Jack Leslie, the senior economist at the group, said: “It is clear that current expectations for gas prices this winter are more than twice what they were before the Russian invasion of Ukraine and higher than the peak in March 2022.” 

“After the Bank of England’s decision [tomorrow], attention will rightly turn back to the Government – where the new Prime Minister, whoever it is, will have to set out new ways to support families in the autumn,” Leslie added. 

The BoE is moving to slow inflation, but that risks slowing the economy further, and this week’s services PMI showed a 17-month low for the UK’s most important sector. The UK numbers were better than Europe, which contracted below the critical 50 level. 

To get in touch and receive further insight into the factors that could impact your overseas payments, click the button below and complete the form on the Lumon website.


The post GBP EUR Drops After Bank of England Recession Warnings  appeared first on Pound Sterling Forecast.


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!

Order by Phone at 888-809-8385 or online at M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at M - F 9am to 5pm EST

Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen! 
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover -  Reduces Smart Meter radiation by 96%!  (See Video)

Report abuse


    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    Load more ...




    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.