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Pound Sterling rises as BoE cuts interest rates by 25 bps to 4.75%.

November 7, 2024

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The Pound Sterling rebounds against the US Dollar after the BoE cuts interest rates by 25 bps to 4.75%, as expected.
The US Dollar should remain well-supported by Trump’s victory in the US presidential election.
Investors await the Fed monetary policy decision, with markets expecting to cut interest rates by 25 bps.

The Pound Sterling (GBP) gains against its major peers on Thursday as the Bank of England (BoE) reduces its interest rates by 25 basis points (bps) to 4.75%. Out of the nine-member-led Monetary Policy Committee (MPC), eight members voted for a rate cut, while one favored keeping interest rates steady. Economists had anticipated that two MPC members would support leaving interest rates at their current levels.

This is the second interest rate cut by the BoE this year. The BoE started reducing interest rates in August by cutting borrowing rates by 25 bps but opted to keep them steady in September.

On the interest rate guidance, BoE Governor Andrew Bailey has commented that interest rates will continue to fall gradually if the economy evolves as expected. However, he emphasized that the monetary policy will remain restrictive until the risks of inflationary pressures remaining persistent get dissipated. The central bank has reduced Gross Domestic Product (GDP) forecasts for this year to 1% from 1.25% projected in August.