Sterling fell in European trade on Tuesday against a basket of major rivals, moving in a negative zone for the first time in four days on risk aversion ahead of the Bank of England’s policy meeting.
The BOE is widely expected to maintain interest rates unchanged for the seventh meeting in a row, but will likely provide clues on the future of rate cuts this year.
The Price
The GBP/USD fell 0.15% today to $1.2703, with a session-high at $1.2724.
The pound closed up 0.1% on Wednesday, the third profit in a row after hot UK services prices data.
UK Inflation
Earlier data showed UK inflation is back to 2% for the first time in three years in May, however services prices remained stubbornly high.
Most economists now expect mainline UK inflation to rise once more in upcoming months, which would dissuade the BOE from a rate cut today.
BOE
The Bank of England is widely expected to maintain interest rates unchanged at 5.25%, the highest since 2008.
UK Rates
According to market bets, there’s a 36% chance the BOE will cut interest rates in August, down from 55% before.
Traders now expect 39 basis points of total rate cuts by the BOE this year.
The BOE has proven recently his reluctance to raise interest rates when it comes to facing inflationary pressures, and it remains on the ready to cut rates at the first possible change.
Such a chance could come in August following a spate of bearish remarks by several BOE officials.
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