UK markets have expressed a downturn for the second time this year after the nation’s inflation and economic growth outlook darkened, thereby dragging the UK behind the other Group of Seven nations.
“Markets are questioning the credibility of UK policy,” Adam Cole, chief currency strategist at RBC Capital Markets, commented. “The wedge between rates and the currency is not yet as wide as it was at that time, but it is moving in the same direction.”
So far this year, the Bank of England has struggled to suppress inflation with its monetary tightening efforts. In response, markets have raised bets that UK interest rates will rise to their highest level in 25 years as the central bank looks to restore control.
On Sunday, BOE Governor Andrew Bailey is expected to speak in France, where he is expected to shed further light on the Bank of England’s actions going forward. The next day, Bailey is set to appear alongside Chancellor of the Exchequer Jeremy Hunt at the Mansion House in London.