Traders reduce Bank of England rate hike expectations after Thursday’s policy decision, pushing GBP/USD 0.1% lower to 1.3470.
The British Pound (GBP) fell 0.1% against the US Dollar (USD) to 1.3470 in early European trading on Monday, underperforming major peers. The decline followed a reassessment of Bank of England (BoE) interest rate expectations after last week’s monetary policy announcement.
The BoE held rates at 3.75% with a 6-3 vote, but markets dialed back tightening bets. Deutsche Bank analysts noted the implied probability of a September hike dropped from 60% to 30%, while year-end pricing for hikes fell by 11.4bps to 31bps. The shift reflects reduced conviction in further BoE tightening this year.
GBP was the weakest major currency against the Japanese Yen, as traders absorbed the BoE’s signal that it was not edging toward a rate hike.