GBP/USD dropped 0.45% to 1.3390 after BoE Chief Economist Huw Pill suggested interest rates could be cut next year if economic growth stalls, cooling expectations for further hikes.
BoE Chief Economist Huw Pill said on Friday there is 'no preset upward path' for bank rate from spring and it could even fall if growth stalls next year. These dovish remarks pressurised the pair, which was last seen at 1.3390, down 0.45% on the day.
Pill suggested UK interest rates may stay on hold or even be cut if growth stalls next year, and lower expected rates make the Pound less attractive to investors.
No. Pill said nothing is baked in and the key determinant will be margin squeeze on companies and how companies react.
The BoE Chief Economist opened the door to the bank rate staying on hold or falling if growth stalls next year, with no preset upward path from spring. Dovish rate expectations weigh on the currency as lower yields make the UK less attractive to investors.
Comments pointing to possible lower UK interest rates are negative for the Pound Sterling, as lower rates make the UK a less attractive place for global investors to park their money.
Dovish remarks from the BoE Chief Economist that bank rate could stay on hold or fall if growth stalls next year would push gilt yields lower as markets price a softer rate path. Confidence is moderate as Pill stressed nothing is baked in.
Talk of possible lower Bank of England rates supports expectations of cheaper credit, which typically pulls benchmark gilt yields down.
Bank of England Chief Economist Huw Pill signaled a dovish shift on Friday, stating there is no preset upward path for interest rates. Pill noted that rates could remain on hold or even fall next year if economic growth stalls, citing uncertainty regarding corporate margin pressures. The comments weighed on the Pound Sterling, which fell 0.45% to 1.3390 against the US Dollar.
Pill suggested UK interest rates may stay on hold or even be cut if growth stalls next year, and lower expected rates make the Pound less attractive to global investors.
No. Pill emphasized that 'nothing is baked in' and the policy path will depend on how companies react to ongoing margin squeezes.