Plan B's restrictive regulations will expire on January 26, due to signs of a decline in the number of COVID-19 cases and hospitalization rates in the UK.
Pound sterling strengthened within a limited range in the 1.3630s range against the US dollar in early European trading today (20/January). EUR/GBP is also completely under pressure in the 0.8330s range. The market is watching the hawkish statement from the Governor of the Bank of England (BoE) as well as the UK government's decision to end social restrictions.
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| GBP/USD Daily chart via TradingView |
The UK central bank looks almost certain to raise interest rates by 25 basis points from 0.25 percent to 0.50 percent at its policy meeting on 3 February 2022. The employment data was better than expected, while the inflation rate far exceeded the central bank's target. The release of inflation data in December 2021 yesterday showed the fastest price growth in the last three decades.
In his testimony before British lawmakers yesterday, BoE Governor Andrew Bailey expressed concern about the rate of inflation, while stressing the central bank's readiness to "act" to address it. According to Bailey, the current increase in inflation in the UK is not only caused by external factors such as rising energy prices and global supply disruptions. A tighter labor market has pushed up wages, creating an internal boost to inflation growth that will be more permanent if not addressed immediately.
One more factor supports the prospect of the "BoE rate hike", namely the end of social restrictions that could increase UK economic activity going forward. PM Boris Johnson said that Plan B's restrictive regulations would expire on January 26, due to signs of a decline in the number of COVID-19 cases and hospitalization rates.
"We receive more boosters than any other country in Europe," said UK Health Minister Sajid Javid, "That's why we are the most open country in Europe and today we have announced plans to go a step further. ."
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