BoE’s Lombardelli: Wouldn’t rule it out rate hike possibility in December

Bank of England Deputy Governor Clare Lombardelli has stated she would not rule out raising interest rates during the December meeting. The UK economy is struggling, with young people being hit particularly hard by the "low-gear economy." There has been a noticeable decline in hiring but no significant layoffs. Lombardelli acknowledged that the BoE does not have enough information yet to make a definitive decision on rate hikes.

Despite the cautious tone, a December hike remains a possibility, but not a certainty. The British Pound (GBP) showed no significant reaction to Lombardelli's comments, currently trading near 1.3452 against the US Dollar (USD). The Deputy Governor's score on the FXS Speechtracker sits below the 7.2/10 historic average, indicating a more dovish stance due to the weak economic momentum and limited redundancies.

While the Bank of England is not yet prepared to signal the end of the tightening cycle, the potential for a December rate hike suggests that hawkish options are still on the table. This mixed outlook for the GBP implies limited upside and suggests that markets are unlikely to push aggressive hike bets. For the US Dollar, expectations of further Fed rate hikes are providing some support, while the upcoming US CPI report will play a crucial role in shaping market sentiment.