The Pound Sterling (GBP) remains on the backfoot as investors continue to dump risk-perceived assets as the market mood turns cautious. The GBP/USD pa
policymakers signals that the Prime Minister may fail to keep the word. For further action, investors will focus on the final S&P Global Manufacturing and Services PMI, which will be released next week.Pound Sterling turns choppy after posting a fresh six-month low near 1.2110 as the downside remains favored amid a cautious market mood.
The sudden interest rate pause conveyed that the UK economy is going through tough times. Before the pause, traders were expecting the interest rate peak at 5.75% as inflation in the UK is the highest among G7 economies. Fears of a slowdown in the UK economy have deepened as the Services PMI shifted to contraction territory. Middle-class families have cut spending on services as high inflation squeezes real income.
The US Dollar continues to capitalize on the risk-off market mood, a resilient US economy, and the hawkish stance of Federal Reserve policymakers on interest rates. The Bank of England decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling .
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