The British Pound Falls Another .6% against the Dollar to total 2% drop in 2020
The British Pound declined again following disappointing economic data and comments from U.K. central bank officials in recent days indicating a willingness to cut rates. The U.K. is set to leave the European Union on Jan. 31, however they will be able to enjoy the current agreement until the end of 2020.
The probability of a 25 basis-point cut in the policy rate, currently 0.75%, at the Jan. 30 meeting has risen to 49% from 5% at the start of last week, according to CME futures data. On Thursday, central bank Gov. Mark Carney said policy makers were prepared to take “prompt” action if economic weakness persists. Two members of the bank’s monetary policy committee have spoken out since, suggesting they would vote for a rate cut if economic data doesn’t improve.
Official estimates out Monday showed U.K. gross domestic product fell 0.3% in November from the previous month, compared to expectations of 0.1% growth, increasing the chances of a cut.
“They have got a coordinated message going out that we are not going to stand by and wait for evidence that the economy has bounced back,” said John Wraith, who covers U.K. rates strategy and economics for UBS.
The U.K.’s FTSE 100 equities benchmark gained 0.3% Monday, while the FTSE 250, which includes companies with a greater focus on the domestic economy, was up 0.9%.
The yield on 10-year U.K. government bonds fell to 0.733% from 0.772% Friday.