Sterling Could Fall if BOE Cuts Rates More Than Forecast -- Market Talk

Dow Jones01-07

1251 GMT - Sterling could weaken if Bank of England cuts interest rates by more than expected this year, City Index analyst Fawad Razaqzada says in a note. Markets are only fully pricing in one 25 basis-point rate cut to 3.5% this year from 3.75% currently, LSEG data show. The path, however, depends on how quickly inflation converges to target and whether growth continues to soften, Razaqzada says. "If disinflation accelerates alongside sluggish economic activity, the BOE may be forced to ease more aggressively, potentially taking rates toward 3% by late 2026." Sterling trades flat at $1.3496. The euro is flat at 0.8655 pounds. (renae.dyer@wsj.com)

(END) Dow Jones Newswires

January 07, 2026 07:51 ET (12:51 GMT)

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The path, however, depends on how quickly inflation converges to target and whether growth continues to soften, Razaqzada says. \"If disinflation accelerates alongside sluggish economic activity, the <a href=\"https://laohu8.com/S/00710\">BOE</a> may be forced to ease more aggressively, potentially taking rates toward 3% by late 2026.\" Sterling trades flat at $1.3496. The euro is flat at 0.8655 pounds. 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Markets are only fully pricing in one 25 basis-point rate cut to 3.5% this year from 3.75% currently, LSEG data show. The path, however, depends on how quickly inflation converges to target and whether growth continues to soften, Razaqzada says. \"If disinflation accelerates alongside sluggish economic activity, the <a href=\"https://laohu8.com/S/00710\">BOE</a> may be forced to ease more aggressively, potentially taking rates toward 3% by late 2026.\" Sterling trades flat at $1.3496. The euro is flat at 0.8655 pounds. 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Markets are only fully pricing in one 25 basis-point rate cut to 3.5% this year from 3.75% currently, LSEG data show. The path, however, depends on how quickly inflation converges to target and whether growth continues to soften, Razaqzada says. \"If disinflation accelerates alongside sluggish economic activity, the BOE may be forced to ease more aggressively, potentially taking rates toward 3% by late 2026.\" Sterling trades flat at $1.3496. The euro is flat at 0.8655 pounds. 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