What UK inflation spike means for Bank of England rates

02/20/25 • 22 min

The outlook for UK interest rates has been clouded once again this week by strong data on the labour market and inflation. The main inflation rate jumped to a 10-month high in January, while the core rate is now printing at nearly double the BoE’s 2% target. Could this herald a slower pace of rate reductions ahead? Or will the committee prioritise supporting Britain’s admittedly fragile growth outlook?
Elsewhere, European currencies have been buoyed by hopes of a peace deal between Russia and Ukraine. Yet, investors are skeptical that the negotiations will lead to anything more than a temporary pause in the conflict, which is acting to keep the rally in risk in check. Our analysts discuss all the latest developments and more in the latest episode of FX Talk.

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Previous Episode

Trump’s tariffs trigger frantic currency trading

Without question, the only real talking point on investors' lips at present is the protectionist utterings emanating from the recently anointed Trump administration. Risk currencies sold-off sharply after Trump unveiled savage tariffs aimed at Canada, Mexico and China over the weekend, although these moves have since reversed after a number of the trade restrictions were delayed at the eleventh hour.
But, what do our analysts make of the headlines? Is Trump serious? Or are these tariff threats merely a negotiating ploy? And how could markets react to the imposition of trade restrictions on the European Union?

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Next Episode

US dollar tanks: Are markets calling Trump’s tariff bluff?

President Trump has followed through with plans to slap massive 25% tariffs on imports from Canada and Mexico, while also unveiling fresh 10% duties on China. The US dollar would ordinarily be trading higher under such circumstances, but the greenback has sold-off sharply across the board. What is fuelling the move? And how concerning is the recent deterioration in US economic news?
Meanwhile, last week’s Ukraine discussions in the White House descended into a farce. European currencies are performing well, however, as markets take an optimistic view on the situation. What do our analysts make of an extraordinary hectic couple of weeks in financial markets?

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