The pound weakened against the dollar and euro today, as markets continued to digest remarks from the Bank of England's chief economist that interest rate cuts could come around the middle of 2024.
Part of those moves versus the dollar come as the greenback bounced back after recent losses, but sterling was also a touch softer against the euro, which was at 87.05 pence, and up from Monday's around three-week low of 86.5 pence.
Markets were focusing on remarks from the BoE's Chief Economist Huw Pill on Monday that pricing in financial markets - that currently points to a first rate cut to Bank Rate in August 2024 - "doesn't seem totally unreasonable."
Though governor Andrew Bailey, on Wednesday, said it was "really too early to be talking about cutting rates."
The pound is interesting, openly speaking about rate cuts is not something central bankers are doing.
Sterling will be under pressure today because markets did not go too aggressive on pricing in those rate cuts. There's still more for the Bank of England rate expectations to drop.
Markets are currently fully pricing in a 25-basis point BoE rate cut in August, and pricing reflects roughly a two-thirds chance of such a cut in June. An August cut was seen as likely but not fully priced in before the remarks.
Also in the mix was an industry survey released Wednesday that showed pay growth slowed in October and rising redundancies led to an increase in the number of jobseekers.
Wage growth is one of the BoE's considerations when assessing the stickiness of inflation in Britain, and its rate policy.
