Currency news

Sterling Falls to 37-Year Low Against the Dollar By Investing.com

ADVERTISEMENT



Investing.com – The pair hit a 37-year low.

The pound/dollar is down 16% this year, to its lowest level since 1985 with 1.1355 today. The increase of the dollar in global markets and the depreciation of the pound sterling are effective factors in the decline in parity.

It was 9.9% in August after hitting double digits in the UK. This is the highest inflation rate in the past 40 years. The Bank of England made its first rate hike in December as inflation started to rise. However, after the Russo-Ukrainian war, inflation in the United Kingdom rose with the increase in inflation in the world. On the other hand, the central bank, which raised interest rates moderately, raised interest rates at a decreasing rate until the last meeting. At the August meeting, the interest rate was raised by 50 basis points and the policy rate was raised to 1.75%.

ADVERTISEMENT

The meeting, which has been postponed for this week due to the death of the Queen, is expected to achieve 50 basis points by the central bank. The Bank of England, which has been criticized for staying in the face of inflation, raised interest rates by a total of 150 basis points in 5 meetings this year.

The Fed, which made its first rate hike in March, raised rates by 75 basis points in both June and July, making it the boldest rate hike in more than 30 years. The decision, to be announced on Wednesday, is expected to be 75 basis points.

Despite the limited decline in fall-related items, which reached a 41-year peak in the US, the continued increase in food inflation, in particular, has reinforced expectations that the Federal Reserve will continue to raise interest rates.

This year the dollar index is up 15%, its highest level in 15 years.

Volatility is expected to increase with interest rate decisions in parity which have fallen to a 37-year low with the effect of a stronger dollar and weak sterling.

Author: Deniz Engin

ADVERTISEMENT
Back to top button

Adblock Detected

Please turn off the ad blocker in your browser so that you can access the site