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LONDON (Reuters) – The pound dipped a touch on the dollar and held steady on the euro on Wednesday, as traders awaited remarks by Bank of England Governor Andrew Bailey that could affect expectations of the central bank’s rate cut path.
Sterling was last down 0.14% at $1.2967, just above the previous day’s intraday low of $1.2945, its lowest since Aug. 19.
That weakness has largely been a result of a stronger dollar, as traders repositioned for a more moderate pace of rate cuts from the Federal Reserve than they had seen a few months ago, and took into account the potential for former President Donald Trump to win the U.S. election in November.
Trump’s policies, particularly his tariff proposals, are seen as likely to lead to higher U.S. yields, and a stronger dollar.
As for the British leg of the sterling/dollar pair, the focus is on Bailey’s remarks at the IMF due at 1845 GMT
“We consider the main risk is that Governor Bailey is dovish because the September CPI report was weaker than expected,” said Carol Kong, currency strategist at Commonwealth Bank of Australia, noting that such remarks would weigh on the pound.
Annual consumer price inflation eased to 1.7% in September, the lowest reading since April 2021, data showed last week.
At present markets are nearly fully pricing a BoE rate cut in November, and see a further rate cut in December as likely, but not certain.
Versus the euro the pound was little changed, at 83.14 pence to the common currency.
Investors focus is also on the British budget on Oct. 30, in which Finance Minister Rachel Reeves faces a tough task to raise the tax revenues she needs to invest more in public services and new infrastructure.
(Reporting by Alun John; Editing by Sharon Singleton)