The pound held above the $1.20 a pound level. The island’s currency was helped by the Bank of England’s rise in base interest rates, eliminating to some extent the expected announcement that the British economy would enter recession.
Britain in recession
The UK economy will plunge into recession in the last quarter of this year, according to an expert estimate, and will only fall out of it at the beginning of 2024. “Five quarters in recession by the fourth quarter this year starting sounds quite negative for the pound,” Chris Turner, chief global markets analyst at ING bank, told Reuters.
Raising interest rates
But Turner noted that these estimates rely solely on the effects of Bank of England interest rate hikes and do not include the potential fiscal stimulus that could come from the UK government . “It may turn out that developments will not be as negative as may result from the conduct of the Bank of England,” he added.
And so far, negative expectations are not translating into the course of the British pound either. The latter strengthened 0.07 percent against the dollar in Monday’s trading, gained 0.12 percent against the euro. How the UK economy is currently doing will be published this Friday. So far, it should still show moderate growth.
