The pound sterling is weakening as the BoE’s dovish bets raise

The pound sterling (GBP) posted slight losses against its main competitors on Friday, with investors looking for fresh guidance on how the Bank of England (BoE) will pursue a path of interest rate cuts in 2025. The BoE’s last statement in mid-December indicated a dovish stance as the nine Monetary Policy Committees (MPCs) voted 6-3 to maintain interest rates unchanged, a larger split than economists had predicted 8-1.

More BoE officials voting to cut interest rates has prompted traders to gradually raise their dovish forecasts for 2025. Markets are now seeing a 53 basis point (bp) rate cut in 2025, down from 46 basis points after the BoE announced its policy on December 19 , suggesting there will be at least two meetings during which officials will cut policy rates by 25 basis points. Read more…

The British pound stabilizes as retail sales raise

The British pound strengthened on Friday after falling 1.6% in the past two days. In the European session, the GBP/USD rate is 1.2510, down 0.10% as of this writing.

Retail sales in the UK recorded a slight raise of 0.2% m/m in November. This marked a rebound from a 0.7% decline in October, but there was no market estimate of 0.5%. Retail sales growth was restricted by feeble clothing sales, which fell to their lowest level since January 2022, as well as damp weather. Annual retail sales rose 0.5%, after a downwardly revised 2% gain in October and below market estimates of 0.8%. Read more…