The Bank of England opted to maintain its interest rates at 5.25% during this week's meeting. They emphasized that the possibility of further tightening remains under consideration, and these rates are expected to persist at elevated levels for an extended period. The decision to hold rates was narrowly favoured by a 5-4 vote, and most experts now anticipate that rates will remain at this level well into the following year.

The committee observed growing indications that the aggressive series of rate increases has started to impact both the job market and the economic growth prospects. Moreover, a significant portion of the rate hikes from the past year has yet to fully affect borrowers.

In the United Kingdom, inflation unexpectedly dropped to its lowest point in 18 months, with the headline rate decreasing to 6.7%. Nevertheless, this level remains uncomfortably high and considerably exceeds the 2% target.

Meanwhile, the United States' central bank also opted to keep its policy unchanged. Although the possibility of another rate hike later in the year is still on the table, most forecasters believe that rates have already reached their peak. The decision to maintain the current policy was unanimous, and the Federal Reserve indicated that rates are likely to remain elevated well into the following year.

In Europe, it appears that the central bank has probably reached the peak of its rate increases, following the hike that occurred last week. The current monetary policy is expected to remain unchanged until late 2024, at which point an initial rate cut is anticipated.

Regarding currency exchange markets, the strength of the US dollar continues to drive market dynamics. GBP/USD is now trading at new 6-month lows below 1.2300, while GBP/EUR has fallen to the lower end of the well-established range of 1.1500 to 1.1750.