The Pound Sterling eases slightly after almost touching 1.3200 against the US Dollar and exhibits a subdued performance against its other major peers on Friday. The British currency drops slightly as investors turn cautious amid the absence of United Kingdom (UK) top-tier economic data. Therefore, market sentiment and speculation for the Bank of England (BoE) interest rate path are guiding the value of the currency.
The near-term outlook of the British currency has remained upbeat recently as investors expect that the BoE’s policy-easing cycle will be shallower than that of other central banks. For example, the European Central Bank (ECB) and the Fed are expected to cut their borrowing rates by 50 basis points (bps) and 100 bps in the remainder of the year, respectively, while the BoE is expected to reduce them by just 25 bps.
The major reason behind firm speculation for BoE’s more gradual easing cycle is that the economy is doing better than previously expected and the fact that inflation in the services sector remains high.
In next week’s UK calendar, investors will focus on the Employment data for the quarter ending July and the monthly Gross Domestic Product (GDP) data for July. Both indicators could be key in determining what will the BoE decide to do with interest rates when it meets later this month.
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