Sterling falls on expectations of BoE cut

Daily Currency Update

The pound slipped against the euro on yesterday as firmer eurozone inflation strengthened expectations that the ECB has reached the end of its easing cycle, while markets increasingly anticipate a Bank of England rate cut in December.

The shift in policy outlook between the two central banks widened rate-differential pressures, supporting the euro and weighing on sterling. Even a modest uptick in eurozone inflation to 2.2% was enough to reinforce the view that further ECB cuts are unlikely, giving the euro additional momentum against the pound.