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Sterling Staggers Ahead of Bank of England Policy Decision

The British pound fell slightly on Thursday as observers anxiously await the Bank of England’s incoming interest rate decision later in the day. After data showed that UK inflation cooled more than expected in August, traders are unsure as to the central bank’s next move. Traders are pricing a 60% chance that the Bank of England will implement a 25 basis point hike, raising interest rates to 5.5%.

Goldman Sachs, Deutsche Bank, and Nomura all believe that the Bank of England will hold rates steady, backtracking from previous expectations of a September hike. Chris Turner, head of markets at ING, disagreed, claiming that a hike of 25 basis points is still likely, claiming that “a hike would provide GBP/USD with some much-needed support.” 

The sterling fell by 0.28% against the US dollar to $1.2309. Meanwhile, the euro strengthened against the British pound by 0.23%, reaching 86.55 pence.

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