Currency Buzz: Sterling Tumbles As BoE Hikes Rate By 25 Bps To 1%

5 May 2022 , 05:11 PM

The Bank of England on Thursday raised interest rates for the fourth time by 25 bps to 1.0%. According to the BoEs new Monetary Policy Report (MPR), inflation is seen peaking at an average of slightly above 10% in Q4 2022, an upwards revision from the March forecast for inflation to peak at around 8.0%. BoE expects the economy to stagnate in the second quarter while pointing to a nearly 1% drop in GDP in the final quarter after the subsequent increase in energy prices. Sterling fell below $1.25, its lowest level since July 2020, as investors reacted to decision from the Bank of England to raise interest rates to their highest since 2009 at 1%. Meanwhile, UK service sector expanded at a stronger pace in April although increased costs and the war in Ukraine combined to contain the pace of expansion, survey results from S&P Global showed on Thursday. The Chartered Institute of Procurement & Supply final services Purchasing Managers Index came in at 58.9 in April, which was above the flash score of 58.3 but down from 62.6 in March. Powered by Commodity Insights