The pound took its biggest tumble against the Euro in 2 weeks today as expectations grew that the Bank of England will cut rates when they meet next week.
The swap market is now pricing in a 100 percent chance of a rate reduction from the BOE on August 4th which is up from 25 percent just one month ago and will mark the first rate cut in over 7 years.
Also putting pressure on the central bank to make a move has been the release of local data lately which has failed to impress the market and has been attributed to the UK’s decision to leave the Eurozone,
“The fundamentals are still very negative for the pound,” said Lee Hardman, a foreign-exchange strategist in London at Bank of Tokyo-Mitsubishi UFJ Ltd.
“It will obviously remain under downward pressure ahead of the Bank of England meeting next week. Expectations are building of a more aggressive easing response given the weakness that we have seen in the latest surveys.” He added.
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