Pound Underperforms Amid BoE Rate Doubts and UK Fiscal Concerns
The British Pound (GBP) has underperformed this week, trading down by 1.27% against the US Dollar (USD). The GBP/USD pair is currently hovering around 1.3220 during the European session, but remains close to its almost three-month low of 1.3200.
The main reason behind the Pound's underperformance seems to be experts doubting hawkish Bank of England (BoE) interest rate expectations. Strategists at Brown Brothers Harriman (BBH) point out a growing disconnect between market pricing and their own expectations for the BoE policy path.
Domestic fiscal concerns are also contributing to the Pound's weakness, particularly ahead of the upcoming UK budget. The latest data from the UK Office for National Statistics showed that public sector borrowing hit £18.27 billion in August, exceeding market forecasts by a significant margin.