Governor said Bank of England Andrew Bailey in an interview published Thursday said the Fed may become “a little more active” about cutting interest rates if there is further good news about… Inflation.
decreased Pound Sterling 1.05 percent in the latest trading to $1.3128, and is heading for its largest daily decline since last April.
The euro/pound pair rose 1.05 percent to 84.12 pence, its biggest daily rise since December 2022.
“The market is betting on sterling rising partly based on the Bank of England remaining neutral while others (central banks) continue to cut interest rates,” said Neil Jones, senior FX strategist for financial institutions at TJM Europe.
“Bailey’s comments change that narrative enough for investors to withdraw some profits,” he added.
The safe-haven dollar rose to the highest level in a month, as tensions escalated in the Middle East in the wake of an attack Ballistic missiles Iranian on Israel.
British two-year bond yields, sensitive to expectations about Bank of England policy, fell by 5.5 basis points to 3.96 percent.
Financial markets expect a 98 percent chance of a 25 basis point cut in interest rates at a meeting British Central Bank In November, a slight increase from Wednesday.
Markets expect interest rates to be cut by 41 basis points by the end of the year from 36 basis points on Wednesday.
Markets are awaiting US jobs data scheduled for release on Friday, which may provide hints about the health of the world’s largest economy and shape the course of the Reserve Bank’s policy. Federal.
Attention is also focused on the first budget plan from the new British government, which is due to be released at the end of this month, with bond yields rising on Wednesday as investors weigh the prospects of higher debt issuance.
George Buckley, chief eurozone and UK economist at Nomura, raised his forecast for British government bond issuance to 315 billion pounds (about $413 billion) this year from 277.7 billion pounds previously expected.
He said: “While taxes and spending are likely to be higher compared to expectations, we believe that achieving balance in the budget will be towards moderate fiscal easing on average,” adding, “If this is the case, this will support our view of the Bank of England easing its policy more gradually.” “Cash”.
