Sterling edges down before BoE's Bailey speech 

Sterling Slides as Investors Await Bank of England Governor Bailey’s Speech

Market Reactions and Central Bank Expectations

By Samuel Indyk

Sterling Performance Against Major Currencies

LONDON, Oct 8 (Reuters) - The British pound was down slightly against the dollar and the euro on Thursday ahead of a speech from Bank of England Governor Andrew Bailey that could shape expectations for the central bank's next policy move. 

Sterling was last down 0.2% against the dollar at $1.3185, just above a three-month low of $1.3181 reached last week. 

The pound was down about 0.1% against the euro, snapping a nine-day streak of gains. It was last at 84.79 pence per euro.

Analyst Insights on Sterling Resilience

"There are concerns about public debt and rising term premium in the UK gilt market, but so far the pound has been resilient," said Tommy von Brömsen, FX strategist at Handelsbanken. 

"Global focus is not on the UK much right now. It's more on Europe and more on the US."

Euro Under Pressure Amid Fiscal Concerns

The euro has been under particular strain, falling to a 17-month low against the dollar as fiscal concerns in France pushed bond yields sharply higher, dampening expectations for further rate hikes from the European Central Bank.

BOE in Focus: Upcoming Speeches and Policy Outlook

Anticipation for Bailey and Lombardelli’s Remarks

Investors are now awaiting speeches from the BoE's Bailey and policymaker Clare Lombardelli for any hints on whether the central bank could raise rates next month.

Bailey and Lombardelli are perceived as centrists on the rate-setting Monetary Policy Committee so their speeches will be closely watched, after both voted to keep rates unchanged at the last meeting. 

Potential Impact on Euro-Sterling

"Any suggestion that they are ready to cross the Rubicon and vote for a hike could depress euro-sterling further today," said Chris Turner, global head of markets at ING. 

Market Pricing for Future Rate Hikes

Money market futures imply a more than 80% chance of a rate hike next month, while two quarter-point hikes are fully priced in by the February meeting. 

(Reporting by Samuel Indyk; Editing by Alex Richardson)