Pound hovers near one-month low as BoE’s Bailey set to testify

By Niket Nishant

Sterling Near One-Month Low Ahead of BoE Testimony

LONDON, Feb 24 (Reuters) - The pound was little changed on Tuesday after eking out modest gains in the last two sessions, as traders awaited testimony from Bank of England Governor Andrew Bailey and monitored potential fallout from new U.S. tariffs.

FX Levels Versus Dollar and Euro

Sterling was trading at $1.3489 against the dollar, close to its lowest for a month. It was steady against the euro, which traded at 87.34 pence.

Bailey’s Hearing and Rate Outlook

Bailey is expected to address parliament's Treasury committee later in the day, where he may offer more insight into his decision to vote to leave rates unchanged at the BoE's meeting earlier this month.

Market Pricing for Rate Cuts

The Monetary Policy Committee held policy after a narrowly split vote. Markets show traders think the central bank will cut rates twice this year to take the benchmark rate to 3.25%.

Economist Poll on Timing

The timing of any cuts remains uncertain, however, according to a poll of economists conducted by Reuters. 

"Commentary that he has seen enough to justify a March rate cut could firm up that pricing in money markets and even push the market to speculating on more than 50 basis points in BoE easing this year," ING's global head of markets Chris Turner said.

External Risks: Tariffs and Politics

TARIFFS, POLITICAL RISKS KEEP INVESTORS JITTERY

U.S. Tariff Timeline and Uncertainty

Investors are also contending with uncertainty over U.S. tariffs. An initial 10% tariff came into effect at a minute past midnight on Tuesday, according to a Customs notice. 

It is unclear when U.S. President Donald Trump's promised increase to 15% might take effect.

Domestic Data Shaping Sterling

However, analysts have turned to domestic factors to assess sterling's appeal in recent weeks.

Jobs and Inflation Readings

Last week, data showed that Britain's jobless rate rose in the fourth quarter of 2025, while inflation in January hit its lowest since March last year, reinforcing bets on rate cuts which typically weigh on a currency.

Manchester By-Election Watch

Also on the radar is an election in Manchester's Gorton and Denton constituency on Thursday, seen as an important test for Prime Minister Keir Starmer and his Labour Party.

Political Sentiment and Allegations

Declining poll numbers and anger over allegations that his chosen U.S. ambassador, Peter Mandelson, once leaked government information to late sex offender Jeffrey Epstein, have given an edge to his rivals. Mandelson has denied wrongdoing.

(Reporting by Niket Nishant. Editing by Amanda Cooper and Mark Potter)