Daily digest market movers: Pound Sterling outperforms its major peers
- The Pound Sterling performs strongly against its major peers on Friday, with investors gaining confidence that the policy-easing cycle by the Bank of England (BoE) will be gradual in the remainder of the year compared with that of its peer central banks.
- According to money market pricing data, the BoE is expected to cut interest rates by 40 bps in the remaining year, while the European Central Bank (ECB) is projected to do the same by 65 bps, Reuters reported. In the same time frame, the Fed is estimated to cut its key borrowing rates by 100 bps, according to the CME FedWatch tool.
- Firm speculation for BoE’s shallow policy-easing cycle is the result of the improved economic outlook in the United Kingdom (UK). In July, the International Monetary Fund (IMF) raised the Gross Domestic Product (GDP) target for this year to 0.7%. Fiscal plans of the new Labour government led by Prime Minister Keir Starmer, which include planning reform and closer trade ties with the European Union, will prompt economic activity, analysts at Goldman Sachs said.
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