Sterling rises despite Bank of England’s aggressive bets

The British pound rose against major currencies on Thursday. The British currency rose after heavy selling on Wednesday. This was driven by intense speculation of a rate cut by the Bank of England at its next monetary policy meeting in December.

The Bank of England’s dovish outlook accelerated after the release of the UK CPI report for October, which showed that price pressures had eased at an expected pace. According to interest rate futures, the probability of the Bank of England cutting interest rates by 25 basis points to 3.75% at the December meeting rose to 85% from 80% recorded before the data release. Read more…

GBP/USD is weakening rapidly amid dovish data and external pressures

The GBP/USD pair fell sharply to 1.3048 on Thursday, pressured by a combination of weak domestic inflation data and a broadly stronger US dollar..

Sterling’s decline was driven by the latest UK CPI report, which showed inflation slowing to 3.6% year-on-year in October, in line with expectations. This has reinforced market expectations that the Bank of England may start cutting interest rates as early as December. This data fits into a broader narrative of weak domestic demand: the labor market is slowing, GDP growth is below the central bank’s expectations, and core inflation is moving slightly below the path expected by the Bank of England. In light of this, institutions, including Deutsche Bank, indicate that the Monetary Policy Committee (MPC) will gain the confidence necessary to cut the interest rate from its current level of 4.00%. Read more…