The pound is losing ground against the dollar as traders bet the Bank of England is likely to trail behind the Federal Reserve in raising interest rates.
“The Bank of England has surrendered leadership in the race to try to normalize monetary policy,” said Paul Robson, a senior foreign-exchange strategist at Royal Bank of Scotland Group Plc in London. A weaker pound is “a reflection of the softer outlook for the U.K. relative to where we were.”
Sterling dropped the most in two weeks yesterday after the Federal Reserve ended its bond-purchase stimulus program, citing an improving U.S. labor market. BOE deputy governor Jon Cunliffe said today the central bank will keep supporting Britain’s recovery as long as it can while keeping a lid on inflation. U.K. government bonds rose with German bunds as data showed consumer prices declined in Europe’s largest economy this month.
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