The British pound is under pressure in today’s trading after some analysts and a Bank of England board member threw into question the expected rate hike due out in the UK next week.
Comments from BoE Deputy Governor Sir Jon Cunliffe earlier today show the divide at the moment between BOE board members on the timing of an interest rate hike and as a result the pound was sold off.
‘I am not going to try and anticipate the November meeting, but for me the economy has clearly slowed this year” Mr Cunliffe said.
“Over the forecast period of three years interest rates will need to rise. The exact timing of when that starts? well, that for me is a more open question”. He added.
Some analysts also believe that the market is jumping the gun on the question of rate rises and that the pound has risen in recent weeks on such expectations. With the UK still without a Brexit deal among other things, it’s going to be difficult to justify a rate hike next week.
“Our highest conviction macro trade in recent weeks has been short GBP as we felt that UK rate hikes were overpriced given the weak starting point for UK growth and the existential Brexit shock that continues to dominate the medium-term outlook,” says Daniel Hui, a foreign exchange strategist at JPMorgan.