Gold hitting all-time highs against British pound as BoE raises interest rates to 14-year high of 4.00%
Editor's Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today's must-read news and expert opinions. Sign up here!
(Kitco News) - Gold against the British pound is holding steady gains at record highs Thursday as the Bank of England raised interest rates for the tenth consecutive time.
As expected the BoE raised the Bank Rate by 50 basis points to 4.00%, its highest level in 14 years. The central bank noted that inflation still remains a threat; however, the monetary policy statement did not provide any clear forward guidance on future rate hikes.
“The labour market remains tight and domestic price and wage pressures have been stronger than expected, suggesting risks of greater persistence in underlying inflation,” the BoE said in its statement.
“The extent to which domestic inflationary pressures ease will depend on the evolution of the economy, including the impact of the significant increases in Bank Rate so far. There are considerable uncertainties around the outlook. The MPC will continue to monitor closely indications of persistent inflationary pressures, including the tightness of labour market conditions and the behaviour of wage growth and services inflation. If there were to be evidence of more persistent pressures, then further tightening in monetary policy would be required,” the central bank added.
The gold market is seeing some broad momentum against many currencies. Which has driven prices to record highs against the pound. Spot gold prices last traded at $1,587.38 an ounce, up 0.79% on the day.
Gold’s gains against the pound outperforming compared to other currencies. Spot gold against the U.S. dollar is currently trading at $1,953.30 an ounce, up 0.16% on the day.
Although the central bank still sees upside risks to inflation, the minutes shows that the committee could potentially end its tightening cycle in March.
“The median [Market Participants Survey (MaPS)] respondent expected Bank Rate to reach a peak of 4¼% in March and to remain at that level throughout the rest of 2023, broadly unchanged since the previous survey. The market-implied path for Bank Rate rose to around 4½% by the middle of this year, down a little since the MPC’s previous meeting and further closing the gap with the median path in the MaPS,” the statement said.