British Pound: November Bank Of England Rate Hike Expected, Says MUFG
TITLE: MUFG Projects Bank of England Interest Rate Increase for November
Analysts at MUFG are forecasting that the Bank of England will initiate a hike in interest rates this coming November. This projection is providing a tailwind for the British Pound as it gains ground against the Euro. Market participants are currently evaluating the fiscal challenges facing France in contrast to the United Kingdom's own fiscal outlook ahead of its next major financial announcement.
Sterling Strengthens Against the Euro
By the close of trading this past Friday, the exchange rate for the Pound against the Euro reached approximately 1.1814. This represents a climb of roughly 0.9% since the beginning of October. Lee Hardman, who serves as a senior currency analyst at MUFG, noted in an October 8 report that the British currency has seen a sharp increase in value relative to the Euro. Hardman observed that a wider sell-off of the Euro has contributed to this trend.
Upcoming Budget and Fiscal Challenges
The British government is preparing for its Budget scheduled for October 28. Officials are tasked with presenting a plan that avoids triggering volatility among bond investors. Meanwhile, external perspectives on the broader economic landscape come from figures like Tim Mahedy, the CEO and Chief Economist at business consultancy Access/Macro. Mahedy, who previously held roles at KPMG and served as Chief of Staff to San Francisco Fed President Mary Daly, as well as a forecaster for New York Fed President John Williams, continues to monitor central bank activities following recent Federal Reserve actions.
Benchmark TEN Year Yields Settle Lower
While it may be premature to conclude that volatility in the bond market has fully subsided, benchmark 10-year yields across North America and much of Europe, including Italy and France, ended the week at lower levels. In Japan, the 10-year JGB yield dropped by seven basis points, settling back at 3%. This movement followed a series of successful coupon auctions, which also allowed the 10-year US Treasury yield to decrease.
Energy Prices and Global Wars
On the geopolitical front, Russian state media reported on Saturday that President Vladimir Putin shared Tehran’s perspective on a potential resolution to the war in Iran with U.S. President Donald Trump. This communication follows a statement from Trump indicating that Russia intends to provide diesel to the international market. This move comes as energy costs have spiked due to the ongoing wars in both Ukraine and Iran. The Interfax news agency in Russia provided details on these diplomatic developments as the global community watches the impact of these conflicts on energy supplies.
Source: forexfactory.com · 2026-10-11