News
Pound Slips as U.S. Data Impacts: BoE Rate Cut Expectations in Focus
(CTN News) – The pound fell on Wednesday, giving up some of the gains from its greatest one-day advance in four months the day before, as a weaker reading of monthly US business activity hurt the dollar.
Sterling was down 0.1% at $1.2435 after rising 0.8% on Tuesday, the biggest in a single day since mid-December. The euro remained stable against the pound at 85.99 pence.
The pound has been under pressure this week, falling to its lowest level since November on Monday after Bank of England officials indicated that the central bank was becoming more confident that UK inflation was subsiding. This implies that interest rates could fall faster than the market currently expects.
Last week, BoE Governor Andrew Bailey said inflation in Britain is receding in line with the central bank’s expectations. Monetary Policy Committee member Dave Ramsden, who recently voted to hold rates at current levels, said the risk of price pressures lasting too high has subsided.
The options market indicates traders’ view that the BoE will drop interest rates twice this year, once in August and again at the end.
According to a Reuters poll published on Wednesday, over half of analysts say there is a 40% possibility of a June rate cut.
“While we would argue that prospect remains plausible it is also clear that the MPC remains divided and that reaching the required majority to cut rates will be difficult over the coming months,” the currency strategist at MUFG said.
GBP/USD
| OVERVIEW | |
|---|---|
| Today last price | 1.2387 |
| Today Daily Change | 0.0014 |
| Today Daily Change % | 0.11 |
| Today daily open | 1.2373 |
| TRENDS | |
|---|---|
| Daily SMA20 | 1.2561 |
| Daily SMA50 | 1.2638 |
| Daily SMA100 | 1.2657 |
| Daily SMA200 | 1.2569 |
| LEVELS | |
|---|---|
| Previous Daily High | 1.2468 |
| Previous Daily Low | 1.2367 |
| Previous Weekly High | 1.2499 |
| Previous Weekly Low | 1.2367 |
| Previous Monthly High | 1.2894 |
| Previous Monthly Low | 1.2575 |
| Daily Fibonacci 38.2% | 1.2406 |
| Daily Fibonacci 61.8% | 1.243 |
| Daily Pivot Point S1 | 1.2337 |
| Daily Pivot Point S2 | 1.2301 |
| Daily Pivot Point S3 | 1.2236 |
| Daily Pivot Point R1 | 1.2438 |
| Daily Pivot Point R2 | 1.2504 |
| Daily Pivot Point R3 | 1.254 |
“In that sense, a June rate cut is a close call and lots will have to go favourably from an inflation perspective to get a cut by then,” he said.
In a speech on Tuesday, BoE chief economist Huw Pill cautioned against early rate reduction, stating that the first cut is likely to be “some time off.”
A survey of purchasing manufacturers released on Tuesday indicated that business activity in Britain increased at the strongest rate in over a year, despite an index of input prices reaching its highest level since May last year.
