The Bank of England raised interest rates once again yesterday, pushing the rate up to 1%, the highest level seen since 2009. The Bank painted a gloomy outlook for the UK economy with growth set to contract and inflation expected to continue to rise. Essentially the BoE is raising interest rates in what they perceive to be a weakening economy. This was not well received by the market, with the result seeing sterling sold across the board.
The pound fell over 2% against the US dollar and almost 1% against the euro on the day. The question now is whether markets have been too aggressive with their repricing of sterling or whether more weakness is on the cards.
Today’s highlight is the April US non-farm payrolls report which is expected to show an almost 400,000 gain in jobs. The unemployment level is forecast to fall to 3.5%. Another potential for market volatility as the week draws to a close.
Have a great weekend.
Written by Viv Savani. 8:22am, May 6th 2022
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