Sterling Slides as UK Keeps Interest Rate
The pound sterling came under pressure from a stronger US dollar and struggled for traction against other currencies after the UK central bank keeps rate unchanged at 16-year high on Thursday.
GBP pressure mounted after Bank of England Governor Andrew Bailey introduced the possibility of a June interest rate cut but said that it is not a certainty.”
“Before our next meeting in June, we will have two full sets of data for inflation, activity, and the labor market and that will help us in making that judgment afresh. In saying that, let me be clear that a change in the Bank Rate in June is neither ruled out nor a fait accompli,” Bailey told a Thursday press conference.
He said it’s likely the BoE will need to cut the Bank Rate over the coming quarters and make monetary policy less restrictive over the forecast period.
“Possibly more so than is priced into market rates,” he also later said. That would be consistent with making sure inflation does not fall noticeably below the target, he said.
The BoE held the Bank Rate at 5.25% on Thursday but new forecasts suggested inflation is likely to fall below the 2% target from the middle of 2026 and remain under until the end of the projection period in Q2 2027, owing to the recent uplift in market expectations for interest rates, which have risen in tandem with expectations for the Fed Funds rate over recent months.
GBPUSD was quoted 0.14% lower, at 1.2475, following Thursday’s press conference, making the pound sterling one of the poorer performing G10 currencies in early North American trade alongside the Japanese yen and Swiss franc.
Sterling’s losses were deepest against the Australian and Canadian dollars, which were trading higher against an otherwise stronger US dollar. FG Offers 3 Bonds Valued at N450bn for Subscription at N1,000/ Unit
