Pound Slides Amid BoE Rate Cut Speculation
July 31 2024 - 10:30PM
RTTF2
The British pound weakened against other major currencies in the
pre-European session on Thursday, as traders speculate that the
Bank of England is likely to lower its interest rate from a 16-year
high at the monetary policy meeting today.
The Bank of England will announce its decision on monetary
policy at 7.00 am ET. The Monetary Policy Committee is expected to
trim the bank rate by 25 basis points to 5.00 percent. This will be
the first reduction since the onset of the pandemic.
However, markets are divided over the chance of a rate cut today
as wage growth and services inflation remain high.
In economic news, data from Nationwide Building Society showed
that U.K. house prices increased for the third straight month in
July. House prices posted a monthly growth of 0.3 percent after
rising 0.2 percent in June. This was the third consecutive increase
and faster than forecast of 0.1 percent.
On a yearly basis, house price growth accelerated to 2.1 percent
from 1.5 percent in June. The latest pace of growth was the fastest
since December 2022. Economists had forecast prices to climb 1.8
percent.
In the pre-European session today, the pound fell to nearly a
1-1/2-month low of 1.1231 against the Swiss franc, more than a
3-week low of 1.2803 against the U.S. dollar and nearly a
3-1/2-month low of 190.97 against the yen, from early highs of
1.1288, 1.2861 and 193.25, respectively. If the pound extends its
downtrend, it is likely to find support around 1.11 against the
franc, 1.27 against the greenback and 188.00 against the yen.
Against the euro, the pound edged down to 0.8442 from an early
high of 0.8421. The EUR/GBP may test support near the 0.85
region.
Looking ahead, manufacturing PMI reports for July from various
European economies and U.K., and Eurozone unemployment data for
June are due to be released in the European session.
At 7.00 am ET, The Bank of England will release its monetary
policy summary and the minutes.
In the New York session, U,S, weekly jobless claims,
manufacturing PMI reports for July from U.S. and Canada and U.S.
construction spending for June are slated for release.
At 9:35 am ET, Bank of England Governor Andrew Bailey will
deliver a speech on the monetary policy decision.
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