How the Outlook on Interest Rates Impacts Sterling

The video explores the relationship between the British pound (sterling) and interest rate expectations. It analyzes sterling's performance against the dollar, highlighting a peak in July and subsequent decline. The discussion includes short sterling contracts and implied yields, with a focus on market reactions to potential rate hikes. The Bank of England's stance and future rate projections are also examined, emphasizing the interconnectedness of sterling's fortunes and interest rate outlooks.

What was the peak value of sterling against the dollar on a closing basis in July?

• 1.4166

• 1.5166

• 1.6166

• 1.7166

What was the implied yield on the short sterling contract on June 16th?

• 1.21%

• 1.31%

• 1.51%

• 1.41%

According to the Bank of England governor, when could the tightening start?

• Not anticipated at all

• Exactly as anticipated

• Later than anticipated

• Earlier than anticipated

What is the new expected timing for a 25 basis point rate hike according to forward contracts based on Sonya?

• June

• February

• September

• December

What rate are economists predicting for the third quarter?

• 0.70%

• 0.40%

• 0.50%

• 0.60%