LONDON – Britain’s pound remained in sight of one-week lows against the dollar on Wednesday on the eve of a knife-edge rate decision by the central bank.
The Bank of England is due to announce its rate decision on Thursday, which has pushed the pound down this month after a series of dovish statements by policymakers led to speculation that an imminent rate cut could be likely.
British house prices rose in January at their fastest annual rate since November 2018, adding to signs of economic confidence since December’s election that have prompted money markets to scale back their expectations of a rate cut.
Money markets currently price a 46 percent chance of a 25 basis point rate cut to the BoE’s 0.75 percent policy rate – compared to around 70 percent at the start of last week.
The pound fell 0.1 percent against the U.S. dollar in early London trade at $1.3012. It was up 0.1 percent against the euro at 84.50 pence.
“We’re just really going to be range-trading ahead of the Bank of England tomorrow,” said Adam Cole, chief currency strategist at RBC Capital Markets.
“OIS pricing is pretty much 50-50, so we should see a decent reaction whatever outcome,” he added.
The British government said it will introduce a bill into parliament on Wednesday for legislation to end automatic rights for European Union vessels to fish in UK waters.
The development comes as talk that the EU wants UK fishing rights in exchange draws the industry into a political struggle between the bloc and its departing member.
Britain will have to compromise on issues such as consumer rights and environment protection if it wants to maintain full access to the European Union’s single market, German Foreign Minister Heiko Maas said on Wednesday. – Reuters