Pound Slips as Rate Cut Odds Soar on BoE Warning

The pound fell to a three-week low after BoE Governor Andrew Bailey signaled the bank’s readiness to cut rates more aggressively if labor market conditions worsen. Sterling dipped to $1.3467 before closing at $1.3474.
Bailey highlighted increasing economic slack and employer tax burdens as reasons for the slowdown. Despite a cautious stance, he expressed confidence in a continued downward rate trajectory from the current 4.25%.
Recent GDP contractions in April and May have heightened concerns about the UK economy. The KPMG report showed the steepest drop in hiring in nearly two years, adding to worries about the labor market.
With inflation still above the 2% target, markets now price in an 85% chance of an August rate cut, up from 76% a week ago.