With a Bank of England meeting scheduled later in the day, the British pound rose on Thursday morning, gaining 0.2% against both the US dollar and the euro. The BoE meeting is expected to involve the expansion of stimulus grants despite it being a period of economic recovery and rising inflation.
The latest British pound uptick follows weeks of strong performance by the sterling, as rising vaccination rates and falling COVID cases have led to the easing of social distancing regulations across the UK.
“We do not expect the BoE to deliver a hawkish shift in policy today, with likely no hints at an earlier hike and no more than two votes for an earlier end to QE (quantitive easing),” analysts at ING said of the upcoming Bank of England meeting.
The United Kingdom has recovered about 10% of its crash in 2020, with inflation jumping to 2.5% in June. This inflation figure already exceeds the 2% target that the BoE set for the upcoming months.
Lee Hardman, an analyst for MUFG, mentioned that industry analysts have started to express more confidence in the strength of the British pound. Should the currency decline as a result of policies discussed during the BoE meeting, such decreases are expected to be temporary.
