Pound Ascends as BoE Tightens Policy


  • The British Pound Sterling (GBP) is attempting to sustain its position above 1.2700 as the Bank of England (BoE) signals a hawkish stance with a 25 basis points increase in interest rates to 5.25%, opening up the possibility of further policy tightening.
  • Despite the BoE's aggressive rate-tightening cycle raising concerns about a potential recession, Governor Andrew Bailey remains optimistic about inflation easing to 5% by October. Persistent service inflation, however, may pose future challenges.
  • The GBP's performance and the UK's monetary policy changes have implications for South Africa due to financial ties between the two countries and potential influences on the South African Reserve Bank's monetary policy strategies.

The British Pound Sterling (GBP) is striving to maintain its position above 1.2700, leveraging the ongoing recovery trend, as market sentiment begins to recover, and the Bank of England (BoE) puts forth a bullish interest rate decision. With an increase in interest rates by 25 basis points (bps) to 5.25% – the highest in 15 years – the GBP/USD pair is looking towards further gains. The central bank keeps the option open for additional policy tightening, given the current inflation rate is significantly distant from the preferred 2%.

Bank of England Governor, Andrew Bailey, ensured that inflation in the United Kingdom is expected to ease to 5% in October, as food inflation seems to be reaching its peak. However, persistent inflation in services could maintain the inflationary pressure in the future. Simultaneously, the central bank’s assertive rate-tightening cycle has heightened concerns of a potential recession, as sectors like housing and manufacturing could face increased pressure.

Daily Digest Market Movers: The British Pound Sterling Capitalizes on Bullish BoE Policy

The Pound Sterling is managing to stay above the 1.2700 level following a substantial recovery, as the risk appetite of market participants improves. Furthermore, Governor Andrew Bailey’s openness to further policy tightening is bolstering the currency.

On Thursday, the BoE lifted interest rates by 25 bps to 5.25% to tackle stubborn inflation, marking the 14th consecutive interest rate hike. Among the nine members of the Monetary Policy Committee (MPC), BoE policymaker Swati Dhingra preferred a steady interest rate policy, while BoE’s Haskel and Mann backed a 50 bps interest rate hike.

Governor Bailey dismissed the possibility of a 50 bps interest rate hike, stating the central bank would maintain interest rates as “sufficiently restrictive for a sufficient period” to ensure inflation returns promptly to 2%. Supporting this stance, BoE Deputy Governor Ben Broadbent emphasised that maintaining relatively high rates over an extended period was key to curbing inflation.

Regarding the inflation outlook, Bailey anticipates that inflation will decrease to 5% by October.

These dynamics in the GBP and the UK’s monetary policy have implications for South Africa. Changes in the GBP can impact the Rand (ZAR), given the financial ties between the two countries. Furthermore, the BoE’s stance on policy tightening could influence how the South African Reserve Bank manages its own monetary policy. As such, these developments deserve close attention from South African investors and policymakers.

Visited 1 times, 1 visit(s) today

Stay ahead in the financial world – Sign Up to Rateweb’s essential newsletter for free. Get the latest insights on business trends, tech innovations, and market movements, directly to your inbox. Join our community of savvy readers and never miss an update that could impact your financial decisions.

Do you have a news tip for Rateweb reporters? Please email us at


Start trading with a free $30 bonus

Trade stocks, forex, commodities, metals and CFDs on stock indices with an internationally licensed and regulated broker. For all clients who open their first real account, XM offers a $30 trading bonus without any initial deposit needed. Learn more about how you can trade over 1000 instruments on the XM MT4 and MT5 platforms from your PC and Mac, or from a variety of mobile devices.


Personal Financial Tools

Below is a list of tools built to assist South Africans to make the best financial decisions:



South Africa’s primary source of financial tools and information

Contact Us



Rateweb strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty. When evaluating offers, please review the financial institution’s Terms and Conditions.

Rateweb is not a financial service provider and should in no way be seen as one. In compiling the articles for our website due caution was exercised in an attempt to gather information from reliable and accurate sources. The articles are of a general nature and do not purport to offer specialised and or personalised financial or investment advice. Neither the author, nor the publisher, will accept any responsibility for losses, omissions, errors, fortunes or misfortunes that may be suffered by any person that acts or refrains from acting as a result of these articles.