By Medha Singh
(Reuters) – The pound hovered near a three-month low against a stronger dollar on Wednesday, after falling sharply in the previous session on data showing inflation in Britain was easing.
The British pound fell 0.1% to $1.2795 on Tuesday, after hitting its lowest level since early August at $1.2719 on Tuesday, after data showed regular wages for British workers fell at the slowest pace on record in the third quarter. grew for two years, supporting the Bank of England’s confidence that inflationary pressures will ease persistently.
The BoE last week cut interest rates for the second time since 2020 and said the Labor government’s first budget would lead to higher inflation and economic growth.
Stubborn British inflation has so far forced the BoE to cut rates more slowly than the eurozone central banks or US central banks, helping the pound to outperform major currencies against the dollar this year.
However, sterling could become vulnerable if the market starts to price in more interest rate cuts by the BoE.
Traders currently estimate only a 15% chance of another 25 basis point rate cut in December.
“Risks remain tilted towards a moderate repricing and the resulting negative impact on sterling, although it may take some time for a lower repricing to materialize as markets will be cautious in assessing the inflationary impact of the budget “, said ING FX strategist Francesco Pesole. .
The pound remained stable at 83.31 pence per euro.
Against other major currencies, a more than six-month spike has scaled, driven by bets that incoming US President Donald Trump’s policies on taxes and tariffs could fuel inflation and prompt the Federal Reserve to to slow down, or even pause, the pace of interest rate cuts. them.
