Anna 
The Pound Sterling (GBP) is under pressure as the Bank of England (BoE) prepares to announce its interest rate decision at 12:00 GMT. Most Monetary Policy Committee (MPC) members are expected to support maintaining the current interest rate, as easing price pressures suggest no immediate need for further quantitative tightening. BoE policymaker Swati Dhingra, concerned about potential consequences of over-tightening borrowing rates, may vote in favor of a rate cut.
Despite encouraging progress in inflation declining towards 2%, BoE Governor Andrew Bailey and other members have consistently stated that it is too early to speculate on rate cuts. UK’s headline inflation, while significantly down from a multi-decade high of 11.1%, remains at 4.0%, double the desired rate of 2%. This prompts policymakers to maintain interest rates on a restricted trajectory.
Neutral guidance on interest rates could enhance the appeal of the Pound Sterling, but it may worsen the economic outlook for the United Kingdom. The UK economy is underperforming in terms of consumer spending, economic activities, and the labor market. An absence of signals for rate cuts could further dampen these economic triggers.
Additionally, the Pound Sterling is weighed down by dismal market sentiment, influenced by the Federal Reserve’s (Fed) reluctance to cut interest rates in March. The overall market mood turns vulnerable, impacting the performance of the Pound Sterling.
