Will inflation cause the Pound to rise?

Bank of England raise interest rates for the 14th time in a row

The Bank of England raised interest rates once again yesterday for the fourteenth time in a row. The central bank has committed to reducing inflation rates which remains well above target.

The current base rate is at 5.25% and we should expect more interest rate hikes to come before we see the Bank of England easing monetary policy.

Interest rates have now gone up on every occasion since December 2021.

This has brought the base rate up to in highest level since April 2008.

The government has committed to try and halve inflation this year but this still remains out of sight.

Energy prices have fallen which had little to do with any government intervention.

The Pound Euro exchange rate fell immediately after the interest rate decision made yesterday.

However, at the time of writing Sterling has regained its losses against the Euro.

It is a tricky time to know which way the GBPEUR rate will move as the European Central Bank are also continuing to raise interest rates.

Indeed the interest rate in the Eurozone is at a record high.

Even though the Bank of England has repeatedly raised interest rates the ECB is starting to play catch up.

Will inflation in Europe continue to rise?

As we move into next week the focus will turn to Tuesday’s inflation figures for Germany.

Inflation is the main reason why interest rates have been going up in the last couple of years.

As Germany is the largest economy within the Eurozone another high reading for inflation could put more pressure on the ECB to continue their current plans.

I have worked for one of the UK’s longest established currency brokers for 20 years and I am confident of being able to offer you a competitive rate when moving money.

If you would like a free quote when buying or selling currency then feel free to contact me directly.

Tom Holian [email protected]

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