Analyst: Oil price shock strengthens Bank of England tightening expectations, providing further support for GBP appreciation

Golden Ten Data reported on July 9 that, due to escalating tensions between the U.S. and Iran, market expectations for the Bank of England to raise interest rates in response to rising oil prices are increasing. The British pound rose to a one-year high against the euro and a three-week high against the U.S. dollar. According to a report by Monex Europe analysts, the oil price shock is reinforcing the outlook for tighter policy from the Bank of England, stating that "the inflation problem in the UK remains more persistent than in the U.S. or the Eurozone." In addition, recent easing of political concerns in the UK and the International Monetary Fund's upward revision of the UK's economic growth outlook have also supported the pound.