HomeFinancial MarketsPounds Heads for One-Month Low Ahead of BoE Decision

Pounds Heads for One-Month Low Ahead of BoE Decision

Stocks on the London Stock Exchange fell and the British pound hovered near a one-month low on Thursday as investors anxiously anticipate the latest interest rate decision from the Bank of England.

Against the U.S. dollar, the pound fell 0.2% to $1.2688; just shy of its one-month low of $1.2680. The FTSE 100 index slumped by 1.46% to a two-week low as well as a third consecutive day of losses.

Markets are largely betting on the Bank of England raising interest rates from 5% to a 15-year high of 5.25%. Still, markets are attributing a 40% probability to the central bank raising interest rates by a half-point as it did in June.

Another concern among investors is Fitch’s recent decision to downgrade the U.S. economy, thereby causing global share markets to decline.

Given that markets expect a 50 basis point interest rate hike, Lee Hardman, senior currency strategist at MUFG, observed that a 25 basis point hike would likely weaken the pound further.

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