The British pound (GBP) remains steady following the Bank of England’s (BoE) decision to keep interest rates on hold. This move aligns with market expectations, yet the BoE's guidance indicates that while rate cuts could be on the horizon, a more hawkish voting split suggests monetary policy stability through the end of the year.
Recent forecasts from HSBC and Deutsche Bank shed light on the sentiment surrounding future rate cuts. HSBC predicts rates will stay steady until April 2026 due to ongoing inflationary pressures, while Deutsche Bank is leaning towards a potential cut by December. This divergence reflects uncertainty in the UK’s economic landscape. Additionally, rising long-term borrowing costs have stirred concerns about the UK’s fiscal health, evidenced by a surge in 30-year gilt yields to their highest levels since 1998.
In currency pair performance, GBP to USD is currently trading at 14-day lows near 1.3472, just below its three-month average, maintaining a relatively stable trading range. Against the euro, GBP to EUR sits at 30-day lows of 1.1470, slightly below its three-month average, while GBP to JPY has also seen a dip, currently at 199.3 but remains above its three-month benchmark.
Amid these developments, the upcoming UK budget announcement on November 26 is anticipated to draw investor attention. Potential tax increases could significantly influence the pound's performance in the coming weeks, particularly as the market assesses the government's commitment to fiscal discipline in the face of rising debt concerns.
