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Sterling falls vs dollar as focus turns to UK data
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LONDON (Reuters) – The British pound fell on Monday against a broadly stronger dollar at the start of a week where traders and the
LONDON (Reuters) – The British pound fell on Monday against a broadly stronger dollar at the start of a week where traders and the Bank of England (BoE) will get the latest insight into the strength of the labour market and price pressures.
Focus is on jobs data on Tuesday and inflation figures on Wednesday, which could give a hint on whether the BoE opts for a second consecutive 50 basis point rate hike at its September meeting.
Headline CPI is expected to have jumped to 9.8% in July.
Money markets currently price in around an 85% chance of a half-point rate hike at the central bank’s September meeting and a total of almost 125 bps of tightening by year end.
30 out of 51 economists polled by Reuters between Aug. 9-12 expect the BoE to deliver another 50 basis point increase to borrowing costs next month.
“Despite some risk of tightness in the jobs market starting to ease, we doubt the data will be enough to shake off market pricing that another 50 bp is on the table for September,” ING global head of markets Chris Turner said in a note.
By 0829 GMT, the pound was down 0.33% against the stronger dollar at $1.20955.
Against the euro, sterling was little changed at 84.555 pence.
Meanwhile, BoE governor Andrew Bailey told British finance minister Nadhim Zahawi he was “open to a review” of the central bank’s mandate, the Telegraph newspaper reported.
Liz Truss, the front-runner to become the next Conservative Party leader and prime minister, previously said she plans to conduct a review of the Bank of England’s policy remit.
Truss is 22 percentage points ahead of her rival Rishi Sunak in the contest to become the country’s next prime minister, a poll of Conservative Party members by Opinium Research showed on Saturday. The winner of the contest will be announced on Sept. 5.
(Reporting by Samuel Indyk; Editing by Kirsten Donovan)
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, maintaining monetary stability, and overseeing the financial system.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is often measured by the Consumer Price Index (CPI).
A basis point is a unit of measurement equal to one-hundredth of a percentage point, commonly used to describe changes in interest rates or other percentages in finance.
The Consumer Price Index (CPI) measures the average change over time in the prices paid by consumers for a basket of goods and services, indicating inflation levels.
Monetary policy refers to the actions taken by a central bank to manage the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation and stabilizing the currency.
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