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Pound Traders Expecting Passive BOE Look to China for Impetus

  • Sterling drops to lowest since 2010 versus dollar this week
  • Goldman, ING push back forecasts for BOE rate increase

When Bank of England policy makers meet in London to set monetary policy next week, pound traders may still be taking their cue from events about 5,000 miles away.

The pound fell to a five-year low against the dollar this week after a rout in Chinese equities roiled global markets. The turmoil, and subsequent tumble in commodity prices, is making analysts and traders more pessimistic on the outlook for the BOE’s first rate-increase since 2007. That means next week’s meeting may be overshadowed by the fallout from events in China, according to Viraj Patel, a currency strategist at ING Bank NV in London.