Sterling Could Underperform if BOE Rate Cuts Outpace Forecasts -- Market Talk

Dow Jones01-03

0840 GMT - Sterling faces a hit from the prospect of the Bank of England cutting interest rates more than the market expects, MUFG Bank's Derek Halpenny says in a note. Market pricing for rate cuts this year looks "too cautious" and the pound could underperform non-dollar currencies later in the year, he says. Sterling was the worst-performing G-10 currency Thursday as an unexpected downward revision to December's U.K. manufacturing purchasing managers' index and sharp rise in natural gas prices modestly increased rate-cut bets for February. GBP/USD rises 0.1% to 1.2395 after hitting an eight-month low of 1.2349 Thursday, according to LSEG. EUR/GBP trades flat at 0.8294. (renae.dyer@wsj.com)

(END) Dow Jones Newswires

January 03, 2025 03:40 ET (08:40 GMT)

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Sterling was the worst-performing G-10 currency Thursday as an unexpected downward revision to December's U.K. manufacturing purchasing managers' index and sharp rise in natural gas prices modestly increased rate-cut bets for February. GBP/USD rises 0.1% to 1.2395 after hitting an eight-month low of 1.2349 Thursday, according to LSEG. EUR/GBP trades flat at 0.8294. 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