UK: Money markets pricing 10 bps rate hike by September 2022

Money markets are pricing a 10 basis points rate increase by the Bank of England (BoE) by September 2022 following British Finance Minister Rish Sunak's budget statement, as reported by Reuters.

Sunak said that the underlying debt would rise indefinitely without corrective action and noted that they cannot ignore the problem of borrowing.

Last week, money markets were expecting the BoE to lower its policy rate into the negative territory in early 2022.

Market reaction

The GBP/USD pair clings to modest daily gains around 1.3970 after these comments despite the broad-based USD strength.