Sterling hits three-week low as the market anticipates BoE rate cut

The British Pound is facing pressure as investors await the Bank of England’s (BoE) decision on interest rates, later today.

Recently, the Pound has weakened, reaching a three-week low and falling against the euro and the dollar.

This decline is partly due to expectations that the Bank of England may cut rates. Markets strongly expect the Bank of England to lower rates from 5.25%, which has also contributed to drops in British two-year and five-year bond yields. T

he future movement of the pound could depend on the BoE’s decision and how the Central Bank communicates on future policy steps. If the central bank cuts rates, the pound might weaken further, as the market has already anticipated easing.

On the other hand, if the BoE keeps rates unchanged, the pound could regain some ground but could remain exposed to the downside due to existing expectations of future rate cuts. The impact on yields could be similar as well, in particular as traders continue to see a softening in monetary policies in the future, reinforced by the Federal Reserve’s comments yesterday.