The Pound slips to its lowest since June as a BoE hold voter pushes back
The case for another Bank of England (BoE) hike rests on energy prices, and on Thursday the government takes value-added tax (VAT) off household electricity bills.
The British pound (GBP) slipped to its lowest level since June, following the Bank of England's (BoE) decision to maintain the base interest rate at 3.75%. On Tuesday, the GBP/USD exchange rate hit 1.3200, the lowest since late June, as BoE external member Taylor argued that rising energy prices alone were insufficient to justify higher rates.
Despite the government removing the 5% VAT from household electricity bills on Thursday, the typical energy bill still increases due to Ofgem's price cap hike. Taylor, one of the six external members who voted for a rate hold, noted that the case for further interest rate increases isn't compelling if energy prices remain high and permeate broader inflation.
The BoE will decide on November 5 and again on December 17. For GBP/USD to recover, UK interest rates must surpass US rates; thus, a hold voter hoping for a January data point maintains the prospect of a November hike.
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