Sterling drifts near two-month lows versus dollar
Oct 17 (Reuters) -The pound drifted near two-month lows against the U.S. dollar on Thursday, after sliding a day earlier when a tame inflation report boosted Bank of England rate cut bets.
Sterling was last down 0.1% at $1.29815 after breaching the key $1.30 mark on Wednesday when data showed British inflation dropped to the lowest since April 2021, and by more than economists had expected.
"The sterling bears are now testing ... a few pips below the 1.30 mark, to reverse the April to September positive trend and send the pair into a medium-term bearish consolidation zone," said Swissquote Bank analyst Ipek Ozkardeskaya.
Traders now see an 85% chance that the Bank of England will lower rates by 25 basis points at its next policy meeting in November, up from about 80% before the data. BOEWATCH
The expectation that stubborn inflation would see the BoE lower rates more gradually then its U.S. and European counterparts had helped send the pound to a two-and-a-half year high against the greenback in late September.
However, strong U.S. data reigning in hefty Fed rate cut bets and tensions in the Middle East have caused a relative repricing among currency pairs, boosting the dollar and weighing on the pound.
Investors are looking to British finance minister Rachel Reeves' first budget on Oct. 30 where she is eyeing tax rises and spending cuts to a value of around 40 billion pounds ($52 billion), two government sources told Reuters.
Against the euro, sterling was little changed at 83.595 pence.
A quarter point interest rate cut from the European Central Bank is nearly fully priced in at its meeting on Thursday, while President Christine Lagarde's remarks will later be parsed for any clues on the ECB's thinking on future moves.
Graphic: World FX rates in 2023 http://tmsnrt.rs/2egbfVh
Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
Reporting by Medha Singh in London; Editing by Kirsten Donovan
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
