Pound slips as BoE hints at upcoming rate cuts
Philip McHugh May 10th 2024 - 2 minute read

The pound ticked lower on Thursday, following the Bank of England’s (BoE) latest interest rate decision.
Meanwhile, Sterling is trading positively so far this morning, with GBP/EUR firming to €1.1636, and GBP/USD stable at $1.2535. GBP/CAD is buoyed at CA$1.7152, while GBP/AUD and GBP/NZD climb to AU$1.8965 and NZ$2.0812, respectively.
Looking ahead, will a stronger-than-expected rebound in UK GDP help the pound to close this week on a positive note?
What’s been happening?
The pound softened during yesterday’s European session after the Bank of England signalled interest rates are likely to start falling in the coming months.
Following its latest policy meeting the BoE kept interest rates on hold, as was widely expected.
However, Sterling weakened as the bank’s forward guidance appeared to hint that it would not wait until after the summer to begin cutting interest rates.
Meanwhile, the US dollar is faced resistance on Thursday as US initial jobless claims unexpectedly jumped to an eight-month high at the start of May. While a positive shift in market risk appetite also acted as a headwind for the safe-haven ‘greenback’ .
This pullback in the US dollar helped to underpin demand for the euro during yesterday’s session, thanks to the strong negative correlation between the pairing.
What’s coming up?
Today’s session opened with the publication of the UK’s latest GDP figures.
The data showed the UK rebounded from a recession in the first quarter. The 0.6% expansion also beat forecasts for a more modest 0.4% rise, which is helping to underpin the pound this morning.
Also potentially influencing GBP exchange rates today will be a speech by BoE Chief Economist Huw Pill. If Pill seeks to temper BoE rate cut speculation this could provide another boost for Sterling later this afternoon.
The publication of the minutes from the European Central Bank’s (ECB) latest policy meeting will be the focus for EUR investors today. Expect to see the euro falter if these reiterate the bank is likely to start cutting interest rates from next month.
Closing out this week’s session will be the University of Michigan’s latest US consumer sentiment index. The index is expected to report sentiment deteriorated again this month. Could this dent the US dollar later this afternoon?
Written by
Philip McHugh