UK interest rate hike expected to rise in December

[The Bank of England may raise interest rates in December, and the pound and the United States show resilience]

Benefited from the fall of the dollar and the expectation that the United Kingdom will continue to raise interest rates in December, the pound is more resilient, and the recent upward movement has been sufficient, and the market outlook will continue to fluctuate. However, due to the emergence of pessimistic remarks about the UK's economic prospects, the market has doubts about whether the UK will continue to adhere to a strong tightening monetary policy in the follow-up, and the follow-up needs to focus on the direction of the focus of relevant remarks.

[A strike breaks out in the UK]

Protests erupted in central London, with thousands rallying in the rain to demand an early general election. At the same time, the Royal College of Nursing, the largest nurses union in the UK, announced that members of the organization may hold a nationwide strike in the next few weeks.

[Oxford report: UK labour market to cool in 2023]

The UK labour market remains tight but is expected to ease in 2023 as labour demand slows, the Oxford report said. In recent months, preliminary reports from job vacancies to a hiring freeze suggest the pressure on the UK labour market has eased, so the peak of the tight labour market may be over. Oxford Economics expects the UK unemployment rate to rise to around 4.7% by the end of 2023, up from the current 3.5%. Wage growth in the UK is expected to slow, Allenby said, which could make the Bank of England less hawkish on interest rate hikes than the market expects.

[British interest rate hike in December is expected to increase]

Although the Bank of England is expected to raise interest rates in December, the economic crisis still limited the pound's gains. Bank of England chief economist Huw Pill (Huw Pill) said that the sharp decline in the size of the British labor force has put upward pressure on inflation in the country, which means that the Bank of England will raise interest rates further in the future. The dramatic reduction in the workforce is a real shock to the economy. And said the Bank of England is particularly concerned that inflation expectations may be higher than the target level, that is, expectations are no longer anchored. Policymakers must prevent a wage spiral. The shrinking labor force is one of the reasons the Bank of England decided to continue raising interest rates.

[Draged by inflation, the UK economy is expected to contract in the third quarter]

The UK economy is likely to contract by 0.6% in the third quarter, which would be the first quarterly contraction since the first quarter of 2021. The drop in economic activity reflects weak household and business confidence, rising inflation and rising interest rates, and the third quarter could signal the start of a deep and prolonged recession. The UK economy is expected to emerge from a technical recession this year with minimal growth, but a recession in the fourth quarter can no longer be ruled out.

[UK pushes Northern Ireland election deadline to March next year]

Britain will announce its intention to delay the deadline for holding a new election in Northern Ireland by six weeks to early March next year, with the option to extend for another six weeks. Northern Ireland has not had a functioning devolved government since February, when the pro-British Democratic Unionist Party began boycotting Northern Ireland's regional parliament to protest post-Brexit trade arrangements. British Secretary of State for Northern Ireland Harris said the deadline for the caretaker government had passed and the next steps would be outlined on Wednesday. In addition, sources said, Harris will also announce plans to implement a budget for Northern Ireland.

[The UK economy is expected to contract by a cumulative 2.1% in 2023-24]

UK real GDP is forecast to contract by 1.6% in 2023 and 0.5% in 2024, as households face a severe cost-of-living squeeze over the next two years. Prime Minister Sunak is expected to implement a tighter fiscal stance than previously expected, while the Bank of England is likely to continue to aggressively tighten monetary policy in the near term, in part to compensate for continued damage to the country's credibility. The policy chaos of recent weeks is now making it harder for Britain to weigh the pros and cons of growth, inflation and interest rates.