Finance
Sterling steadies day ahead of BoE meeting
Published by Global Banking & Finance Review®
Posted on November 5, 2025
2 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on November 5, 2025
2 min readLast updated: January 21, 2026
Sterling steadies before the BoE meeting, with markets anticipating potential rate changes. Global market corrections and UK budget concerns weigh on the pound.
LONDON (Reuters) -The pound stabilised on Wednesday as traders looked to fine-tune positioning ahead of Thursday's important Bank of England meeting, but remained at close to a seven-month low against the dollar and its weakest in well over two years against the euro.
A day ahead of the BoE meeting, markets are still pricing around a one-in-three chance of a 25-basis-point rate cut, leaving scope for a knee-jerk reaction in the pound in either direction depending on the outcome.
Sterling was last up 0.2% on the dollar at $1.3049 , though it hit $1.3011 in early Asia trade, its lowest since mid-April.
Similarly, the euro was down 0.1% at 88.07 pence after hitting 88.3 pence in Asia trade, its highest since May 2023.
A raft of data released last month, most notably cooler-than-expected inflation figure, caused markets to raise bets on BoE easing, and weighed on the pound.
It has continued to weaken this week, and Chris Turner global head of markets at ING said in a note this might "probably have more to do with the global equity correction," given BoE expectations have been fairly steady most recently.
Stocks around the world, particularly highly valued tech names, have come under pressure this week. [MKTS/GLOB]
All else being equal, the pound typically performs well when investors are positive about global growth and the stock market, and comes under pressure when they are not.
Also in the mix for sterling investors is Britain's budget, due later this month. Finance Minister Rachel Reeves, in a speech on Tuesday, paved the way for broad tax rises.
If that weighs on growth, it could cause the BoE to ease rates more quickly, in turn dragging on sterling.
There was little British economic data on Wednesday, but a survey showed pay settlementsawarded by British employers held steady in the three months to September, holding at the joint lowest level since December 2021.
(Editing by Tomasz Janowski)
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic goals like controlling inflation and stabilizing currency.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
Foreign exchange, or forex, is the market where currencies are traded. It determines the value of one currency against another and is essential for international trade.
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, managing monetary policy, and ensuring financial stability.
The UK economy refers to the economic activities and financial systems of the United Kingdom, including production, consumption, and trade of goods and services.
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