Forex News: Pound Falls Amid BoE Rate Cut Speculation

Pound Falls Amid BoE Rate Cut Speculation

(RTTNews) - The British pound weakened against other major currencies in the European session on Friday, amid rising expectations that the Bank of England (BoE) will cut interest rates further this year.

Following the release of the UK labor market data for the three months ending in August, BoE dovish predictions increased this week.

The unemployment rate increased but pay growth stalled, according to the employment figures. With a spike to 4.8%, the unemployment rate reached its highest level since the three-month period that ended in March 2021.

Traders expect the BoE to lower interest rates by 46 basis points (bps) this year.

European stocks tumbled amid renewed concerns about the health of the U.S. banking sector.

Concerns about U.S.-China trade tensions the ongoing war in Ukraine and the U.S. government shutdown are also weighing on sentiment.

Traders also speculate that the Federal Reserve (Fed) may lower interest rates by more than 50 basis points (bps) as worries about the US job market rise.

In the European trading today, the pound fell to a 3-year low of 1.0584 against the Swiss franc, a 1-week low of 0.8725 against the euro and nearly a 2-week low of 200.69 against the yen, from early highs of 1.0648, 0.8700 and 202.14, respectively. If the pound extends its downtrend, it is likely to find support around 1.05 against the franc, 0.88 against the euro and 198.00 against the yen.

Against the U.S. dollar, the pound edged down to 1.3411 from an early near 2-week high of 1.3472. On the downside, 1.32 is seen as the next support level for the pound.

Looking ahead, U.S. Baker Hughes oil rig count data, U.S. building permits, housing starts, import and export prices, all for September, are slated for release in the New York session.

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