The British Pound experienced losses, declining towards $1.33, reaching its lowest point in a week. This downturn followed the release of inflation data that fell short of market forecasts. The data has spurred speculation about potential early interest rate cuts by the Bank of England. Government borrowing figures also exceeded expectations.
- Sterling fell towards $1.33, its weakest level in a week.
- Inflation held steady at 3.8% in September, below the predicted 4%.
- Core inflation decreased to 3.5% from 3.6%, also below expectations (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 potential interest rate cuts by the Bank of England early next year.
The British Pound’s value is being negatively impacted by lower-than-expected inflation data. This data suggests the Bank of England might lower interest rates sooner than previously anticipated. This prospect, coupled with higher-than-forecasted government borrowing, is creating downward pressure on the currency. The expectation of future interest rate cuts often makes a currency less attractive to investors.