The British Pound has experienced losses, reaching its weakest level in a week, driven by inflation figures that fell short of anticipated levels. This has led to increased speculation about potential early interest rate cuts by the Bank of England. Government borrowing also exceeded forecasts, adding to the downward pressure.
- Sterling extended losses toward $1.33, its weakest level in a week.
- Headline inflation held steady at 3.8% in September, below the forecasted 4%.
- Core inflation edged down to 3.5% from 3.6%, also undershooting expectations of 3.7%.
- Government borrowing totaled £99.8 billion in the first half of the fiscal year, exceeding the OBR’s forecast by £7.2 billion.
- Markets now anticipate that the Bank of England could start cutting interest rates early next year.
The currency’s value is being influenced by economic data that suggests a slower pace of inflation. This, combined with higher-than-expected government borrowing, contributes to the expectation that the central bank may need to adjust its monetary policy sooner than previously anticipated, potentially leading to lower interest rates and decreased attractiveness for investors. This ultimately results in downward pressure on the currency’s value.