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Sterling (GBP) is languishing after three days of highs and lows as investors appear confused about the UK’s inflation and economic outlook following the release of PMI data for September. As the Bank of England (BOE) raised interest rates, which severely hit demand, British companies were reluctant to fully utilize their production capacity and reduced hiring.
Investors do not expect overall demand in the UK to recover quickly as the Bank of England vows to keep interest rates higher for longer to ensure price stability. Bank of England deputy governor Ben Broadbent believes inflation will fall to 2% within two years as restrictive monetary policy dampens the labor market and economic prospects.
