Pound Sterling trades with caution ahead of BoE’s monetary policy decision
The Pound Sterling (GBP) trades cautiously against its major currency peers on Thursday ahead of the Bank of England’s (BoE) monetary policy announcement at 12:00 GMT. The central bank's interest rate decision is expected to be a cautious one at times when the United Kingdom (UK) Chancellor of the Exchequer, Rachel Reeves, is likely to announce tax hikes in the upcoming Autumn Budget later this month.
UK Chancellor Reeves is expected to break her self-imposed rules of not raising taxes on working people and avoid borrowings to fund day-to-day public spending to plug a £22bn shortfall in the government's finances.
Investors wait for the BoE to hold interest rates steady at 4%, with a 6-3 majority as inflationary pressures are significantly higher than the central bank’s 2% target. The latest UK Consumer Price Index (CPI) report showed that the headline inflation on year grew steadily by 3.8% in September, while the core CPI – which excludes volatile food and energy items – cooled down to 3.5% in the same period.
According to a report from Reuters, traders see one in a three chances that the BoE will cut interest rates by 25 basis points (bps) to 3.75% at this Thursday's meeting.
Apart from the BoE’s rate decision, investors will focus on commentaries regarding the current labor market status and when price pressures would start cooling down. In September’s policy meeting, the central bank stated that inflation will peak around 4% this month.
Source : Fxstreet.com
