Pound steadily declining following BoE rate cuts
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Daily Currency Update
The Pound Sterling is steadily declining after the Bank of England (BoE) cut interest rates from 5.25% to 5.0%, leading to outflows from previously optimistic positions. Ongoing social unrest in the UK has heightened investor concerns about the economic outlook, prompting a reduction in bullish bets on the pound. Markets are now awaiting signs of stabilization and clarity on potential future BoE rate cuts in 2024.Key Movers
Anticipation of a 50 basis point rate cut from the Federal Reserve at its September meeting has grown due to a slowing economy. However, the likelihood of a smaller 25 basis point reduction has also increased, now standing at 26.5%.On Monday, markets had fully priced in a 50 basis point cut and even begun considering the possibility of an emergency rate reduction before September. As market conditions have stabilized somewhat, those odds have decreased. This evolving outlook has added volatility to currency markets, with the US dollar experiencing fluctuations as market participants adjust their positions based on shifting expectations for Fed policy.
Expected Ranges
- GBP/USD: 1.2645 - 1.2735 ▼
- GBP/EUR: 1.1575 - 1.1635 ▼
- GBP/AUD: 1.9305 - 1.9395 ▼
- EUR/USD: 1.0915 - 1.0985 ▲