Sterling rises slightly after 4-week decline

Sterling showed a modest gain on Monday after four consecutive weeks of declines against the dollar, as traders turned their attention to a series of upcoming British economic data that could influence the Bank of England’s (BoE) approach to future interest rate cuts.

Earlier this month, the BoE reduced rates for the first time since 2020 but signalled a cautious outlook on the possibility of further easing.

Key economic reports are expected this week, including employment data on Tuesday, inflation figures on Wednesday, and economic output data on Thursday.

These releases are likely to provide clearer insights into the persistence of inflation and wage pressures, which have been a significant concern for the BoE.

Catherine Mann, a member of the BoE’s Monetary Policy Committee, noted in a podcast that rising prices for goods and services, along with wage pressures, could continue for years.

The BoE’s decision to cut rates was closely contested, and the central bank indicated that it is not in a rush to implement additional cuts.

Sterling rose 0.1 per cent against the dollar to $1.2764 after hitting a more than five-week low of $1.26655 last Thursday. Against the euro, the pound remained largely stable at 85.54 pence per euro.

Market expectations currently suggest that the BoE may implement further rate cuts totalling 44 basis points by the end of the year, compared to 101 basis points anticipated from the US Federal Reserve.

Attribution: Reuters