Pound Sterling rises despite firm BoE dovish bets

The Pound Sterling (GBP) moves higher against its major currency peers on Thursday. The British currency gains ground after an intense sell-off on Wednesday, which was prompted by intensified speculation of an interest rate cut by the Bank of England (BoE) in its next monetary policy meeting in December.

BoE dovish expectations accelerated after the release of the United Kingdom (UK) Consumer Price Index (CPI) report for October, which showed that price pressures cooled down at an expected pace. According to interest rate futures, the probability of the BoE cutting interest rates by 25 basis points (bps) to 3.75% in the December meeting has increased to 85% from 80% registered before the data release. Read more...

GBP/USD weakens rapidly amid dovish data and external pressures

The GBP/USD pair fell sharply to 1.3048 on Thursday, pressured by a combination of soft domestic inflation data and a broadly stronger US dollar.

The pound's decline was triggered by the latest UK Consumer Price Index (CPI) report, which showed inflation slowed to 3.6% year-on-year in October, matching forecasts. This bolstered market expectations that the Bank of England (BoE) could initiate interest rate cuts as early as December. The data fits a broader narrative of weakening domestic demand: the labour market is cooling, GDP growth is undershooting the central bank's projections, and core inflation is tracking slightly below the BoE's anticipated path. In light of this, institutions, including Deutsche Bank, suggest the Monetary Policy Committee (MPC) will gain the confidence needed to lower the Bank Rate from its current 4.00% level. Read more...