HomeFinancial MarketsSterling Tanks Ahead of Bank of England Policy Meeting

Sterling Tanks Ahead of Bank of England Policy Meeting

The sterling recorded its largest weekly fall against the yen in a year, with the Japanese currency receiving a major boost after the country’s central bank suggested that it would implement a change in monetary policy. On Friday, the sterling was slightly higher against the yen at 181.15; a 0.3% rise following Thursday’s 3% drop. Still, the British currency held steady against the euro.

News of the currency’s stumble comes ahead of the Bank of England’s policy meeting next week. Markets are expecting the central bank to hold rates constant. According to future markets, the BoE’s first rate cut is expected in June, while the European Central Bank and Federal Reserve are expected to implement rate cuts as soon as March.

“Whilst a lot of the weak structural backdrop is known, the key negative for sterling over 2024 is the potential for the markets to price in earlier rate cuts,” Gareth Gettinby, an investment manager with Aegon Asset Management, remarked, suggesting that the sterling’s strength will be largely affected by interest rates.

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