Sterling slid to 3-week low as BoE decision uncertainty adds pressure

  • 11/2/2021
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* Graphic: World FX rates in 2021 tmsnrt.rs/2egbfVh * Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv LONDON, Nov 2 (Reuters) - The pound edged lower on Tuesday, hovering around a three-week low, pressured by uncertainty whether the Bank of England will raise interest rates this week. Sterling rose to a 20-month high versus the euro in late October amid expectations for a BoE interest rate hike as inflation risks surged, but growing doubts around what the central bank will actually do at its policy meeting on Thursday was keeping investors on their toes this week. BoE Governor Andrew Bailey has talked of the need to act to contain inflation expectations, with two of the other nine Monetary Policy Committee members voicing similar concerns. Meanwhile, two MPC members say there is little they can do to fix the root cause of accelerating prices: bottlenecks caused by the reopening of the world economy which might fade quickly. “It appears that the BOE hike trade is losing steam ahead of Thursday’s meeting with sterling underperforming overnight,” said Jeffrey Halley, senior market analyst at OANDA. Sterling slid 0.2% versus the dollar to $1.3637 at 0830 GMT, hitting a three-week low. Versus the euro, it fell 0.1% to its lowest level in three weeks, 85.03 pence. Adding to growth worries are the post-Brexit spat with the European Union over Northern Ireland trading arrangements and a fishing row with France. Britain said on Tuesday that France had freed a British scallop dredger that it seized last week in French waters, while French President Emmanuel Macron postponed slapping trade sanctions on Britain over the fishing row. Editing by Alison Williams

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