Sam Boughedda

Investing.com — Monday’s drop in the Pound against major currencies was despite hawkish statements from the BoE, banks stating that they expect a rate hike 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.

It climbed up to 0.8456, gaining 0.35%.

Following Bailey’s remarks, some of the largest banks around the globe are following investors predictions and believing that the BoE will increase rates before 2021 ends. 

Allan Monks, JPMorgan’s economist (NYSE:), said Bailey was “trying to signal a quicker near-term response”. He sees rates rising to 0.25% in November then to 0.75% next august. 

Goldman Sachs (NYSE 🙂 experiences three interest rate increases, taking them to 0.75% in May and then climbing to 1.1% at the end of 2022. 

Investors seem fully priced in any hikes regardless of what the outcome. The current price is 1.3730, up from its low at 1.34 at September’s end.

But economists fear that the central bank may be moving too quickly. Many believe that the current inflation is temporary and is due to supply chain issues as well as higher energy prices.