- Except against the US Dollar, the Pound Sterling exhibits a mixed performance compared to its major peers on Wednesday. The British currency is expected to trade sideways, with investors focusing on the Bank of England’s (BoE) interest rate decision, which will be announced on Thursday. The BoE is expected to cut interest rates by 25 bps to 4.75%. This would be the second interest rate cut this year. The BoE started its policy-easing cycle with a usual rate cut of 25 bps on August 1.
- Investors expect the BoE rate cut decision to be a 7-0 vote split, while the other two Monetary Policy Committee (MPC) members are expected to support leaving interest rates unchanged at their current levels.
- Investors will pay close attention to BoE Governor Andrew Bailey’s press conference to know the impact of the United Kingdom (UK) budget for FY2025 on the inflation outlook and the monetary policy action in December. There would also be some questions about the impact of Trump’s victory on the UK economy if he wins or remains in the lead by then.
- According to economists at the National Institute of Economic and Social Research (NIESR), the UK economic growth would be just 0.4% if Trump’s tariff plans were implemented. The agency also sees a slower Gross Domestic Product (GDP) growth at 1.2% next year and 1.1% in 2026, even without Trump’s tariffs, Reuters reported.
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