Weekly Roundup: Pound crashes to multi-month lows as BoE pauses hiking cycle
Amy Richards September 25th 2023 - < 1 minute read
The pound was muted at the start of the week, in what proved to be the calm before the storm.
On Wednesday, the UK’s consumer price index printed below forecasts to show that inflation was cooling more rapidly than expected. This saw markets drastically reprice bets on a BoE rate hike from 80% to below 50%, which sent Sterling tumbling.
The central bank did indeed decide to hit pause on its hiking cycle, piling further pressure on the pound. However, the BoE left the door open to another rise in the future, thereby limiting GBP’s losses.
Friday saw the pound extend its downside after below-forecast UK retail sales and a troubling decline in service sector activity. Recession fears and diminishing BoE bets saw Sterling hit multi-month lows.
Looking ahead, Sterling could languish close to its current weak levels through much of the week amid a notable lack of any high-impact UK data.
The main release is the UK’s final GDP figure for the second quarter, due out on Friday. Unless it differs from previous estimates, it’s unlikely to cause much movement.
In the absence of data, the market mood could drive the increasingly risk-sensitive currency.
Written by
Amy Richards