Pound Dips Despite Hawkish BoE Talk By Investing.com

By Sam Boughedda

Investing.com — On Monday, the pound dipped against most other major currencies, notwithstanding hawkish talk from the BoE and banks saying they see a hike in rates as likely in November.

Sterling slipped 0.12% against the dollar to $1.3728 heading into the U.S. close, despite hawkish comments from Bank of England Governor Andrew Bailey over the weekend, who said they “will have to act” as energy prices drive consumer costs higher.

The gained 0.35%, climbing to 0.8456.

Some of the biggest banks in the world are following investor predictions in believing the BoE will raise rates before the end of 2021, following Bailey’s comments. 

JPMorgan (NYSE:) economist Allan Monks said Bailey is “trying to signal a swifter near-term response” and that he sees rates moving to 0.25% in November and then to 0.75% next August. 

Meanwhile, Goldman Sachs (NYSE:) sees three hikes, taking interest rates to 0.75% by May, before climbing to 1% by the end of 2022. 

Whatever happens, it seems investors are fully pricing in hikes, with the climbing from a low of around 1.34 at the end of September to its current price of about 1.3730.

However, economists are concerned that the central bank is moving too fast, with some stating that the current inflation emerging from supply chain issues and increased energy prices is temporary.