Wary FX traders have continued to second guess the Bank of England's outlook in the hours before the monetary policy decision is announced. That sent the Pound lower versus the US Dollar on expectations that the anticipated rate hike would be the last until after the Brexit takes place next March. With a surprise highly unlikely, the anticipated 25 basis points rate increase has already priced into the GBP/USD pair. More important will be Governor Mark Carney's commentary after the announcement.
As reported at 11:29 am (BST) in London, the GBP/USD was trading at $1.3081, down 0.81% and off the session trough of $1.3068; the pair's high in the session is at $1.3129. The EUR/GBP is trading at 0.88795 Pence, down 0.05%; the pair ranged from 0.88764 Pence to 0.88985 Pence in the day's trading.
Some View Rate Hike as Risky
Though the majority of economists polled do expect that the BoE will follow through with a rate hike today, there are some strategists who believe that that is a risky move. They argue that the uncertainty of a soft Brexit in March weighs too heavily to jeopardize a struggling economy. They also point out that the impact of a growing trade rift between the United States and China and, indeed, many of its trading partners, still isn't known and could hit the global economy harder than anticipated.