Moody’s upgrades Agnico Eagle’s rating to A3 on debt reduction
Investing.com -- The Bank of England’s interest-rate cut expectations appear too conservative, which could leave the British pound vulnerable, according to UBS Global Wealth Management’s head of global foreign exchange and commodities Dominic Schnider.
Schnider pointed to the UK’s challenging fiscal situation as a factor that could cause growth and inflation to fall below consensus forecasts, potentially leading to more rate cuts than markets currently anticipate.
The BOE narrowly approved a rate reduction at its August 7 meeting, emphasizing inflation risks and maintaining its stance on "gradual and careful" policy easing. This cautious approach prompted markets to reduce expectations for additional rate cuts, with UK money markets now pricing only a 39% chance of another rate reduction by year-end, according to LSEG data.
Recent economic indicators have supported the BOE’s careful approach, including higher-than-expected UK inflation figures and stronger second-quarter economic growth data.
Despite these positive signals, Schnider believes current market pricing for rate cuts is excessively cautious and could reverse. Such a shift could weaken sterling, potentially pushing the euro to 0.8800 pounds by March 2025, up from its current level of 0.8653.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.