Pound down on rate cut expectations

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The British pound has come under pressure today after speculation by the market that a rate cut is on the cards from the Bank of England.

At8.57am (GMT) the British currency was trading at US$1.3075c down from US$1.3140c in yesterday’s trading.

Bank of England policymaker Martin Weale, turned dovish in an interview with the financial times where he noted that the latest purchasing managers index, which hit the market at it’s lowest level since the financial crisis was a real concern, and was a lot worse than expected.

Although Mr Weale didn’t explicitly mention that he would back a rate cut at next week’s board meeting his overall tone suggested he was headed that way.

“Weale has been hawkish for most of his tenure at the BOE, so his shift affected sterling.”noted Mansoor Mohi-uddin, a Singapore-based strategist at Royal Bank of Scotland Group Plc.

“The pound is set to stay under pressure as expectations build for next week’s MPC meeting and the BOE inflation report.” he added.

The currency has been under pressure ever since Britain took the decision to leave the European Union and the weakness is expected to continue as the country develops a plan to leave.

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