Daily digest market movers: Pound Sterling remains subdued amid absence of UK top-tier economic data
- The Pound Sterling exhibits a subdued performance against its major peers on Wednesday. The British currency struggles to gain strength despite growing speculation that the policy-easing cycle by the Bank of England (BoE) would be shallow in the remainder of this 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 cut 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.
- An improving economic outlook in the United Kingdom (UK) and a slower decline in service inflation have supported expectations of the BoE opting for a gradual policy-easing cycle. The UK economy is expected to perform better than initially anticipated due to an expansion in manufacturing as well as the service sector.
- The final estimate for S&P Global/CIPS Composite PMI came in at 53.8 in August, higher than the preliminary release of 53.4. The indicator suggests that the economy grew at the fastest pace since April.
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