According to a statement on Tuesday, September 19, 2023, by the Deputy Governor of the Central Bank of the United Kingdom of Great Britain and Northern Ireland, the Bank of England (BoE), Mr. Sam Woods, there is now a growing impairment of their financial capital among British lenders, and especially commercial banks, due to the increase in inflation in the recent past and the persistence of still high inflation in the present. In an effort to tame this so-called rampant inflation, the UK central bank BoE has raised its main interest rate from the December 2021 value of 0.1% to the current 15-year high, which has already reached a rate of 5.25% p.a. and the financial market expects its further increase, already at the end of this 38th week of 2023, to the value of the main interest rate of 5.5% per year.
These facts, including other factors such as the state of public finances in the United Kingdom and the growth potential of the British economy, are reflected in the state of the exchange value of the domestic currency of this European island kingdom, the British pound (GBP). Currently, during the European afternoon of Tuesday 19/09/2023, at approximately 14:36 CET, the British pound (GBP) against the US dollar (USD) was trading on the foreign exchange market in forex operations at a mutual exchange rate of USD 1.241 per GBP with a historical by a daily strengthening of the GBP by +0.23% against the USD. This strengthening of the GBP against the USD, according to economic correspondents linked to brokerage analysts, is related to the existing sentiment of investors who anticipate that the central bankers of the Bank of England will indeed raise interest rates later this week.
On the day and time in question, the British Pound (GBP) also strengthened against the European single currency, the Euro (EUR), as the EUR/GBP currency pair traded at 0.862 GBP/EUR against the EUR/EUR, with the EUR down -0.081 on the day to date % exchange rate against GBP. During this day and time, the so-called global currency pair of the single European currency Euro (EUR) and the US dollar (USD), as the world’s reserve currency, traded on the foreign exchange market in the framework of forex operations at a value of 1.069 USD per EUR with the daily strengthening of EUR by + 0.05% of the exchange rate against the USD. At this time, the exchange value of the USD measured by the dollar index DXY (US Dollar Curreny Index) reached a point level of 104.99 USD points with a daily decrease of -0.18% of the point level according to this index, which compares the value of the USD with the other six major world currencies.
The UK economy has proved surprisingly resilient, BoE deputy governor Mr Woods, who is also director-general of the Office for Prudential Regulation, said, adding that regulators were keeping a close eye on potential strains in the banking sector. “So far, things have been going a little better than many expected, and especially with Covid, of course, the huge fiscal and monetary support has really protected the banking system from credit losses,” Mr Woods told CNBC’s economic news on Tuesday 09/19/2023. The global banking system was rocked earlier this year by the collapse of several small US lenders, but Mr Woods stressed that Britain’s smaller banks are more than three times better capitalized than they were during the financial crisis. According to economic correspondents, this announcement by BoE Deputy Governor Mr. Woods only reinforced the already strong investor sentiment, where investors, traders and most other financial market participants are convinced that the current economic situation of the United Kingdom shows potential for its growth, which is already reflected in the strengthening of the exchange rate values of GBP against both USD and EUR.