Pound Set for Weekly Drop as Prospects of BOE Rate Hike Diminish
- Slowing inflation hurts pound; growth data due next week
- Hawkish MPC was cap to reflationary potential, says Citigroup
BNY Mellon's Derrick Says Pound Influenced by Politics
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The pound headed for a weekly drop against all its major peers as the prospect of an imminent Bank of England interest-rate hike diminishes after U.K. inflation unexpectedly slowed in June and Brexit negotiations made little progress.
The market-implied probability of a rate hike by the end the year, which jumped in response to a recent hawkish shift among BOE policy makers, has fallen to 44 percent, from 61 percent before Tuesday’s inflation data. More clues on the strength of the U.K.’s economy will come when second-quarter growth figures are released on July 26, with economists forecasting a reading of 0.3 percent, up from 0.2 percent in the first three months of 2017.