Pound Sterling drops as UK PM Starmer supports lower interest rates
The Pound Sterling (GBP) trades slightly lower against its major peers on Tuesday as United Kingdom (UK) Prime Minister (PM) Keir Starmer stresses bringing inflation and interest rates down to boost business investment and economic growth.
While addressing reporters on Monday, UK PM Starmer said, “The most important things that we can do for growth, the most important things that we can do for business is first to drive inflation down so that interest rates come down further, and the cost of business investment comes down with it,” Reuters reported.
These comments from Starmer came while praising the Autumn budget announced by Chancellor of the Exchequer Rachel Reeves last week, in which she raised taxes by 26 billion pounds by 2029-30 to fill the fiscal gap.
The scenario of lower UK interest rates bodes poorly for the Pound Sterling.
Meanwhile, traders are also confident that the Bank of England (BoE) will cut interest rates in the monetary policy meeting this month amid weakness in the job market and slowing inflation growth.
Contrary to firm dovish BoE market expectations, policymaker Megan Greene stated on Monday that she would support interest rate cuts only if the labour market and consumption deteriorate further.
Source : Fxstreet.com
