🇬🇧 Sterling Forex Handbook (October)

STERLING

Sterling is the currency of the United Kingdom and nine of its associated territories. The pound is the main unit of sterling,[4] and the word "pound" is also used to refer to the British currency generally, often qualified in international contexts as the British pound or the pound sterling.

Sterling is the world's oldest currency that is still in use and that has been in continuous use since its inception. It is currently the fourth most-traded currency in the foreign exchange market, after the United States dollar, the euro, and the Japanese yen. Together with those three currencies and Renminbi, it forms the basket of currencies which calculate the value of IMF special drawing rights. As of mid-2021, sterling is also the fourth most-held reserve currency in global reserves.

The Bank of England is the central bank for sterling, issuing its own banknotes, and regulating issuance of banknotes by private banks in Scotland and Northern Ireland. Sterling banknotes issued by other jurisdictions are not regulated by the Bank of England; their governments guarantee convertibility at par. Historically, sterling was also used to varying degrees by the colonies and territories of the British Empire.

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BANK OF ENGLAND

BANK RATE

The Bank Rate Rate was hiked by 50bps on the 22nd of September to 2.25 percent. The next meeting is on Thursday the 3rd of November and the long term outlook is for hawkish hikes.

• 50bps hike expected

• Five MPC members voted for 50bps, three voted for 75bps and one voted for 25bps.

• The bank also noted that uncertainty around the outlook for retail energy prices has fallen, following the announcements of support measures including an Energy Price Guarantee, which is likely to limit significantly further increases in inflation.

• Previously 50bps hike to 1.75%

• Source, Bank of England

The Bank of England is the Central Bank of the United Kingdom and monetary policy decisions are made by the nine members of the Monetary Policy Committee.

Monetary Policy Summary Highlights (Aug)

• 2% inflation target to sustain growth and employment.

• voted 8-1 to increase Bank Rate by 50bps to 1.75%.