The European Central Bank raised interest rates

Daily Currency Update

After a momentous week of political focus in the UK, Sterling will now be turning to next week's Bank of England decision for focus.

Fiscal policy has been in focus for the pound, and Sunak's new government has been generally perceived as one that can bring the right fiscal policy to the table that will give the market the calm it needs after the infamous Truss and Kwarteng budget that sent the pound plummeting.

Sterling has risen in what has been described as a mini 'Rishi rally' post the announcement this week that Rishi Sunak, ex chancellor, has become the 57th prime minister of the UK.

However, with the next budget by Jeremy Hunt postponed to November 17th, focus now turns to how the UK central bank's monetary policy decisions can complement the government's intended fiscal policy. The market will also focus on what the Bank of England intends to do about its quantitative easing or tightening plan, and some have argued that it would have been more suitable for them to have heard the government's budget plans ahead of releasing its latest monetary policy decisions next Thursday. The market is pricing in somewhere between a 50bp and 75bp interest rate hike from the BoE. It will follow some aggressive rate hikes from both the ECB and US Federal Reserve in recent weeks.