Pound Sterling faces pressure amid BoE concerns over UK near-term demand outlook
The Pound Sterling (GBP) trades lower against its major currency peers on Friday, except second-level safe-haven currencies. The British currency has come under pressure after the Bank of England (BoE) decided to hold interest rates steady at 4%, with a narrow majority vote of 5-4.
Five out of nine Monetary Policy Committee (MPC) members voted to keep interest rates at their current levels, against the expected six. For the first time, Deputy Governor Sarah Breeden voted against the majority and joined other officials – Swati Dhingra, Dave Ramsden and Alan Taylor – in backing a 25-basis-point reduction in borrowing rates.
In the monetary policy statement, the BoE warned that “weak demand could weigh on inflation in the medium term” and the “risk from greater inflation persistence has become less pronounced recently”.
Meanwhile, BoE Governor Andrew Bailey reiterated that monetary policy path remains titled to the downside. However, he clarified that officials need to see “downward path of inflation become more established before we cut rates again". "We are likely to continue to be on a gradual downward path for rates," Bailey added.
Signs of United Kingdom (UK) price pressures peaking are expected to boost expectations for one more interest rate cut by the central bank this year.
Source : Fxstreet.com
