British Prime Minister Theresa May is making plans in case the UK will end up leaving the European Union without a deal, according to Bloomberg. Following the announcement Sterling sank to $1.2854 – its lowest level since August 2017.
Monetary Policy Committee (MCP) member Ian McCafferty said on Tuesday, 7 August the central bank was likely to raise rates again but reiterated it would do so slowly and gradually. McCafferty told LBC radio, “We’re only talking over the next couple of years of possibly a couple of more small interest rate rises.” This interview comes just a week after the Bank of England increased the interest rate to 0.75 per cent on 2 August.
In the US, President Donald Trump warned other world leaders against conducting business with Iran after re-imposing sanctions on Tehran. Trump hailed them as the “most biting sanctions ever imposed”. It followed Trump’s decision in May to withdraw from a landmark 2015 nuclear agreement, which spooked investors and put pressure on the Rial.
Finally, Federal Reserve (Fed) member Thomas Barkin has suggested that interest rates need to move back to “normal” levels. In his Wednesday speech in Virginia, Barkin also said, “It is difficult to argue that lower-than-normal rates are appropriate when unemployment is low and inflation is effectively at the Fed’s target.” His comments support market consensus that the Fed will continue tightening monetary policy.