Skip to content GBPUSD Nears $1.3 as BoE Rate Cut Expectations Shift
The GBP/USD currency pair is rising, approaching $1.3 after a recent dip to a two-month low. This increase follows news that the UK’s Finance Minister, Rachel Reeves, might approve additional government borrowing in the next budget. This move could mean the Bank of England may delay reducing interest rates.
Minister Reeves Eyes New Financial Guidelines for Public Spending
Minister Reeves is considering changing financial guidelines to concentrate on the public sector’s net financial liabilities, which could potentially allow for increased capital investments.
According to the Institute for Fiscal Studies, this change could have permitted an extra £53 billion in borrowing as of last March. Nevertheless, the Treasury has stated it does not plan to utilize this opportunity immediately.
Bank of England Rate Cut Unlikely as Inflation Stays High
Concerns about inflation persist, with the Bank of England’s Governor, Andrew Bailey, highlighting ongoing high inflation in services despite a general lower-than-expected inflation rate.
These economic adjustments and high service costs pose continuing challenges. As a result, the likelihood of a Bank of England rate cut in November has decreased significantly, from a certainty to 86%. Moreover, recent data indicate that growth in the UK’s manufacturing and services sectors this October was slower than anticipated.
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