Sterling drops on Bailey remarks and shift to safe havens
By Stefano Rebaudo
Oct 3 (Reuters) -Sterling was on track on Thursday for its biggest daily fall in almost two years versus the euro and in six months against the dollar as investors shifted to safe-haven assets and Bank of England Governor Andrew Bailey hinted at faster policy easing.
The BoE could become "a bit more activist" on rate cuts if there is further good news on inflation, Bailey said in an interview published on Thursday.
Sterling GBP= was last down 1.05% at $1.3128, on course for its biggest daily fall since April.
The pound is seen as a risky currency that tends to rise along with equities.
Euro/sterling EURGBP= was up 1.05% at 84.12 pence, in its biggest daily rise since December 2022.
"The market is running long GB pound in part based upon the BoE staying on hold whilst those around it continue to cut," said Neil Jones, senior foreign-exchange salesperson to financial institutions at TJM Europe.
"Bailey's comments shift this narrative sufficiently for investors to take chips off the table...," he added.
The safe-haven dollar rose to a one-month peak, as tensions simmered in the Middle East following Iran's ballistic missile attack on Israel.
UK 2-year gilt yields GB2YT=RR, sensitive to expectations on BoE policy, dropped 5.5 basis points (bps) to 3.96%.
Interest rate futures showed financial markets see a 98% chance of a 25-bp rate cut at the central bank's November meeting, up slightly from Wednesday. Markets are pricing in 41 bps of rate cuts by year-end from 36 bps on Wednesday. IRPR
Market participants will look to Friday's U.S. jobs data, which could offer hints on the health of the world's biggest economy and shape the Fed's policy path.
The first budget plan from the new British government, due at the end of this month, is also in focus, with bond yields rising on Wednesday as investors weighed up the possibility of higher debt issuance.
George Buckley, Nomura's chief UK and euro area economist, upgraded forecasts for gilt issuance to 315 billion pounds ($413 billion) this year versus 277.7 billion previously expected.
"While both taxes and spending are likely to be higher across the forecast horizon, we think the balance will be towards a mild fiscal loosening on average," he said.
"If so, that would, at the margin, support our view of the Bank of England easing more gradually."
($1 = 0.7625 pounds)
Graphic: World FX rates in 2023 http://tmsnrt.rs/2egbfVh
Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
Reporting by Stefano Rebaudo, Additional reporting by Harry Robertson; Editing by Mark Potter
Aset Terkait
Berita Terbaru
Pengungkapan: Entitas XM Group menyediakan layanan khusus eksekusi dan akses ke Fasilitas Trading Online kami, yang memungkinkan Anda untuk melihat dan/atau menggunakan konten yang tersedia pada atau melalui situs, yang tidak untuk mengubah atau memperluas, serta tidak mengubah atau memperluas hal tersebut. Akses dan penggunaan ini selalu sesuai dengan: (i) Syarat dan Ketentuan; (ii) Peringatan Risiko; dan (iii) Pengungkapan Penuh. Oleh karena itu, konten disediakan hanya sebagai informasi umum. Anda juga harus ketahui bahwa konten Fasilitas Trading Online kami bukan sebagai ajakan atau tawaran untuk untuk melakukan transaksi apa pun di pasar finansial. Trading di pasar finansial mana pun melibatkan tingkat risiko yang signifikan pada modal Anda.
Semua materi yang diterbitkan di Fasilitas Trading Online kami hanya untuk tujuan edukasi/informasi dan tidak boleh mengandung nasihat dan rekomendasi finansial, pajak investasi atau trading, catatan harga trading kami, penawaran, permintaan, transaksi dalam instrumen finansial apa pun atau promo finansial untuk Anda yang tidak diminta.
Konten pihak ketiga apa pun, serta konten yang disiapkan oleh XM, seperti opini, berita, riset, analisis, harga, informasi lain atau link ke situs pihak ketiga yang tersedia "sebagaimana adanya", sebagai komentar pasar umum dan bukan menjadi nasihat investasi. Sejauh konten apa pun ditafsirkan sebagai penelitian investasi, Anda harus memperhatikan dan menerima bahwa konten tersebut tidak dimaksudkan dan belum disiapkan sesuai dengan persyaratan hukum yang dirancang untuk mempromosikan kemandirian riset investasi dan dengan demikian akan dianggap sebagai komunikasi pemasaran di bawah hukum dan peraturan yang relevan. Mohon dipastikan bahwa Anda telah membaca dan memahami Notifikasi pada Riset Investasi Non-Independen dan Peringatan Risiko kami mengenai informasi di atas, yang dapat diakses disini.
