London (awp/afp) – The pound weakened somewhat on Monday, with economic indicators suggesting the possibility of a rate cut on Thursday following the Bank of England’s (BoE) monetary policy meeting. or during the next one in August.
Around 11:35 a.m., the British currency lost 0.13% against the greenback, to 1.2670 dollars, and lost 0.23% against the single currency, to 84.56 pence per euro. Analysts expect the Bank of England to keep rates unchanged on Thursday.
There are in fact only slim “chances of a rate cut this Thursday, which is normal in the run-up to the legislative elections” in the United Kingdom, recalls Kathleen Brooks, analyst at XTB. Since their announcement and until their holding on July 4, speeches by BoE members have been canceled.
However, “signs of diminishing inflationary pressures could pave the way for a first action in August” on the part of the Bank of England to lower rates, notes Henry Cook, analyst at MUFG. Inflation figures for May in the United Kingdom are due on Wednesday, the day before the British central bank’s decision on its key rate.
In April, British inflation had slowed sharply, falling to 2.3% year-on-year. The BoE’s 2% rate target could be reached in May, notes Kathleen Brooks, “which would mean that British inflation is below European and American levels, at least for the moment”. (The second estimate of May inflation in the euro zone will be published on Tuesday.)
The consensus of analysts compiled by the Bloomberg agency puts inflation at 2% year-on-year in May in the United Kingdom. Although inflation in the services sector remains strong, other recent indicators “continue to point to further softening of the labor market and price pressures”, favoring a reduction in rates in the future, adds Henry Cook of MUFG.
The analyst cites in particular a monthly survey of the Royal Institute of Chartered Surveyors (RICS) on the property market published last week, which reported a slight drop in inquiries from new buyers alongside a contraction in sales concluded in May in the United Kingdom . Prices on the real estate market also stagnated in June according to data from the real estate platform Rightmove revealed on Monday.
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09:35 GMT 21:00 GMT
EUR/USD 1.0714 1.0703
EUR/JPY 168.90 168.46
EUR/CHF 0.9559 0.9532
EUR/GBP 0.8456 0.8436
USD/JPY 157.64 157.40
USD/CHF 0.8922 0.8906
GBP/USD 1.2670 1.2687
afp/vj
