The pound has weakened against the dollar and the euro for the third consecutive week following the Bank of England’s (BoE) interest rate decision. Investors are pricing in the possibility of a rate cut in December, given signals that BoE Governor Andrew Bailey may be leaning towards a more pro-rate cut stance.
The BoE kept rates unchanged, thwarting some analysts’ expectations of a 25 basis point cut.
However, markets anticipate continued volatility ahead of the Treasury Budget announcement this month.The pound traded at $1.3105, down 0.27%, bringing its weekly loss to 0.50%.
The euro, meanwhile, is poised to close the week in positive territory, rising 0.25% to 88.10 pence. Experts say that if inflation slows in October and November, the pound will continue to weaken against the euro. The wp-paragraph Markets are currently… 60% probability of a 25 basis point cut in December is expected. British 2-year bond yields have risen to 4.11%, while the European Central Bank is projected to keep interest rates at 2% until the beginning of 2027.These developments suggest that the pound may remain weak until the end of the year.
