Cautious speech from BoE Governor Bailey weighs on pound

Sterling fell on Wednesday as investors continued to digest cautious comments from Bank of England Governor Bailey on the outlook for interest rates. Bailey hinted that further rate hikes were not guaranteed and saw no data to justify a rise in market rate expectations in the near term.

Lee Hardman, FX analyst at MUFG, wrote: “We now expect the Bank of England to raise interest rates by 25 basis points this month, but doubt that rates will need to rise as much as the current market is pricing. The relatively cautious stance of the Bank of England in the short term Still a negative for sterling.”