The Pound Sterling held steady against major currencies after UK inflation data for November aligned with forecasts. This strengthens the expectation that the Bank of England will maintain interest rates at 4.75% during its upcoming policy meeting. Meanwhile, the Federal Reserve is anticipated to reduce rates by 25 basis points.
The Pound Sterling broadly steadies against major peers after UK inflation data for November came in as expected. The inflation data cements prospects that the BoE will keep interest rates steady at 4.75% on Thursday. The Fed is expected to cut interest rates by 25 basis points to 4.25%-4.50%.
The Pound Sterling (GBP) whipsaws against its major peers on Wednesday after the release of the United Kingdom (UK) Consumer Price Index (CPI) data for November, which showed that price pressures rose in line with estimates. The CPI report highlighted that annual headline inflation accelerated to 2.6% YoY, as expected, from 2.3% in October. Compared with the previous month, headline inflation rose by 0.1%, also meeting expectations and easing from the 0.6% growth in October. The core CPI – which excludes volatile items such as food, energy, oil, and tobacco – grew by 3.5%, slower than estimates of 3.6% but faster than the former reading of 3.3%. Services inflation, a closely watched indicator by Bank of England (BoE) officials, rose steadily by 5%. The rise in inflation cements expectations that the Bank of England (BoE) will leave interest rates unchanged at 4.75% in the policy meeting on Thursday, with an 8-1 vote split. BoE Monetary Policy Committee (MPC) member Swati Dhingra is expected to vote for cutting interest rates by 25 basis points (bps) to 4.5%. Investors will closely watch BoE Governor Andrew Bailey’s press conference to gauge whether the central bank will accelerate its policy easing in 2025. Going forward, investors will also focus on the UK November retail Sales data, which will be released on Friday. Daily digest market movers: Pound Sterling stays sideways ahead of Fed policy The Pound Sterling remains broadly sideways against the US Dollar (USD) around 1.2700 in Wednesday’s London session. The US Dollar consolidates ahead of the Federal Reserve’s (Fed) monetary policy announcement at 19:00 GM
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