Daily digest market movers: Pound Sterling underperforms on dismal market mood
- The Pound Sterling exhibits a weak performance against its major peers at the start of the week. The British currency faces pressure on dismal market sentiment due to growing tensions between Iran and Israel in the Middle East region. Israel intensified strikes across Beirut and its southern suburbs on Sunday after Israeli Prime Minister Benjamin Netanyahu vowed to win.
- Ongoing tensions in the Middle East region have deepened risks of Oil supply chain reduction, which have resulted in a sharp upside in energy prices. This could lead to a higher foreign outflow from Oil-importing economies.
- Apart from the cautious market mood, rising expectations of the Bank of England (BoE) to cut interest rates again in November have also weighed on the Pound Sterling. Last week, the comments from BoE’s Governor Andrew Bailey in an interview with the Guardian newspaper indicated that the central bank could be a bit more aggressive in its approach to lower interest rates if inflationary pressures continue to decline.
- On the contrary, BoE Chief Economist Huw Pill advised cutting interest rates gradually in his speech at the Institute of Chartered Accountants in England and Wales on Friday. Pill said, "While further cuts in Bank Rate remain in prospect should the economic and inflation outlook evolve broadly as expected, it will be important to guard against the risk of cutting rates either too far or too fast.”
- This week, the major trigger for the Pound Sterling will be the monthly Gross Domestic Product (GDP) and the factory data for August, which will be released on Friday.
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