Sterling Tumbles as BoE Hike Bets Retreat Ahead of Jackson Hole
Sterling is headed for its first weekly decline against the US dollar in over a month as expectations for a Bank of England interest rate hike this year have receded. The British pound has eased about 0.1% to $1.3582, reaching a more than one-week low and setting it up for a weekly drop of 0.4%. This downward trend is largely driven by dollar strength as the US currency regains some losses and investors cut their bets on an interest rate hike from the BoE this year.
According to LSEG-compiled data, traders are now pricing in about 25 basis points of rate hikes by December, down from the 30 bps they were wagering more than a week ago. Ipek Ozkardeskaya, senior market analyst at Swissquote Bank, believes that the Bank of England will wait for the UK government's budget to reveal its policy before making any decisions.
The focus is now shifting to the Jackson Hole economic symposium in Wyoming, where investors are keen on Chairman Kevin Warsh's thoughts on monetary policy outlook. Warsh may preview the Fed five task forces' early findings on communications, inflation frameworks, balance sheet, data, productivity and jobs, which will influence his future plans.