Pound Slides Amid BoE Rate Cut Speculation

(RTTNews) - The British pound weakened against other major currencies in the pre-European session on Thursday, as traders speculate that the Bank of England is likely to lower its interest rate from a 16-year high at the monetary policy meeting today.

The Bank of England will announce its decision on monetary policy at 7.00 am ET. The Monetary Policy Committee is expected to trim the bank rate by 25 basis points to 5.00 percent. This will be the first reduction since the onset of the pandemic.

However, markets are divided over the chance of a rate cut today as wage growth and services inflation remain high.

In economic news, data from Nationwide Building Society showed that U.K. house prices increased for the third straight month in July. House prices posted a monthly growth of 0.3 percent after rising 0.2 percent in June. This was the third consecutive increase and faster than forecast of 0.1 percent.

On a yearly basis, house price growth accelerated to 2.1 percent from 1.5 percent in June. The latest pace of growth was the fastest since December 2022. Economists had forecast prices to climb 1.8 percent.

In the pre-European session today, the pound fell to nearly a 1-1/2-month low of 1.1231 against the Swiss franc, more than a 3-week low of 1.2803 against the U.S. dollar and nearly a 3-1/2-month low of 190.97 against the yen, from early highs of 1.1288, 1.2861 and 193.25, respectively. If the pound extends its downtrend, it is likely to find support around 1.11 against the franc, 1.27 against the greenback and 188.00 against the yen.

Against the euro, the pound edged down to 0.8442 from an early high of 0.8421. The EUR/GBP may test support near the 0.85 region.

Looking ahead, manufacturing PMI reports for July from various European economies and U.K., and Eurozone unemployment data for June are due to be released in the European session.

At 7.00 am ET, The Bank of England will release its monetary policy summary and the minutes.

In the New York session, U,S, weekly jobless claims, manufacturing PMI reports for July from U.S. and Canada and U.S. construction spending for June are slated for release.

At 9:35 am ET, Bank of England Governor Andrew Bailey will deliver a speech on the monetary policy decision.