Currencies
The Pound’s Slump Adds to Inflation Headache at Bank of England
- Bloomberg SHOK model points to price pressures from sterling
- Pound has been worst-performing major currency in 2025
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The Bank of England faces an extra dilemma ahead of next week’s interest-rate decision, with the slump in the value of the pound threatening to add to resurgent price pressures.
Bloomberg’s SHOK model is similar to the BOE’s own method for predicting inflation in the months ahead. It estimates that sterling’s drop against a trade-weighted basket of currencies since the BOE’s last forecast in the autumn will boost inflation by as much as 0.23 percentage points in the coming quarters.