BOE faces critical policy decision with pound reach its lowest level

The Bank of England’s (BOE) governor Andrew Bailey has reiterated his commitment to reining the inflation, but the bank is struggling to balance as growth slows and the labor market tightens.

The bank faces a critical choice as it deals with a deteriorating currency and the effects of the government’s new energy cost package that has changed inflation expectations.

The Monetary Policy Committee (MPC) will announce its latest decision on Thursday, with analysts divided over whether they expect to raise interest rates by 50 or 75 basis points.

UK headline inflation fell to an annual 9.9 percent in August depended on preliminary estimates from the Office for National Statistics down from 10.1 percent in July, which driven by a drop in motor fuels.

On Wednesday, the U.S. Federal Reserve is expected to raise its benchmark borrowing rate by 75 basis points, the third consecutive increase of this size.

Markets expect the Fed to maintain its hawkish course until inflation is brought under control, which will provide more impetus to the U.S. dollar as investors seek safe haven in a price rally environment.