Sterling at 2 week lows ahead of Bank of England interest rate decision

The British Pound faced increased pressure on Monday, and significant events scheduled for this week are expected to cause high volatility in Sterling currency exchange markets.

Global risk appetite has improved, as seen by the FTSE 100 index rebounding to 2-month highs, which will help support the Pound. However, increased speculation about a Bank of England rate cut this week has undermined the UK currency.

Sterling is currently at two-week lows against both the US Dollar and the Euro, trading at 1.2859 and 1.1873, respectively. Two major interest rate decisions this week are expected to significantly impact the Pound.

Currency markets were also evaluating the statement on government finances from Chancellor Reeves, delivered yesterday. A downbeat assessment and potential spending cuts are likely to dampen optimism about the UK's growth outlook, especially with increased talk of tax increases in the autumn.

Regarding the Bank of England, a majority of investment banks anticipate a rate cut, though there is a high degree of uncertainty.

The Federal Reserve will announce its interest rate decision on Wednesday as well. The Fed is widely expected to maintain rates at 5.50% this week, but markets are also predicting a rate cut in September.

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