The British pound experienced downward pressure, dipping below $1.335 and approaching a seven-week low. This decline reflects investor concerns surrounding inflation risks and the Bank of England’s (BoE) future monetary policy direction. Conflicting signals from BoE policymakers, coupled with persistent political unease, are contributing to the pound’s weakness. Adding to the pressure, a stronger US dollar, driven by positive US GDP revisions, further dampened the currency’s prospects.
- The British pound slipped below $1.335, nearing a seven-week low.
- Investors are weighing inflation risks and the Bank of England’s policy outlook.
- BoE policymaker Megan Greene urged caution on rate cuts, suggesting a pause in November.
- Governor Andrew Bailey signaled more easing is still needed.
- UK inflation, the highest in the G7, stood at 3.8% in August and is expected to peak at 4% before easing toward target in 2027.
- Greater Manchester Mayor Andy Burnham is calling for renationalizing key services and proposing £40bn in borrowing for housing.
- Stronger-than-expected US GDP revisions reinforced dollar strength and dampened Fed rate-cut bets.
Overall, this suggests a challenging period for the British pound. Divergent views on monetary policy within the Bank of England create uncertainty, and persistent inflationary pressures continue to weigh on investor sentiment. Furthermore, the potential for increased government borrowing and nationalization of key services could further destabilize the gilt market, adding to the pound’s woes. A strengthening US dollar also exerts downward pressure on the currency.