Sterling reached about $1.3420 against the U.S. dollar Friday, a six-week high, FXStreet reported, while Reuters said markets fully priced a Bank of England (BoE) increase for Nov. 5.
FXStreet also reported the pound’s third consecutive daily gain. Reuters said market pricing implied a quarter-point move at next week’s meeting, with another increase reflected in expectations by February. Those bets are not an announced policy decision.
The BoE held Bank Rate at 3.75% in September. Three of the Monetary Policy Committee’s nine members favored raising it by a quarter point to 4%. The committee said risks to its inflation outlook leaned toward faster price increases.
The Office for National Statistics (ONS) reported that consumer prices rose 3.5% over the year through September, compared with 3.1% through August. The BoE’s inflation target is 2%. GDP expanded 0.7% across the three months through August, the ONS said.
The Office for Budget Responsibility forecast in its October outlook that inflation would peak at 3.75% in early 2027, with higher energy prices contributing to the increase. Reports differed on the new Budget’s market effect: FXStreet described it as supportive for sterling, while Reuters said it had made little difference to markets or rate expectations. Neither report established the Budget as the cause of Friday’s currency move.
Mortgage pricing is another channel through which rate expectations can affect households. Nationwide said expectations of Bank Rate increases were lifting market rates used to price mortgages. It reported that UK house prices were unchanged in October from September, while annual growth slowed to 0.5% from 0.8%.
The BoE’s next rate decision is scheduled for Nov. 5. The ONS’s next inflation release is due Nov. 18.
