Pound Slumps Amid BoE Rate Cut Expectations

The British pound hit a five-month low against the euro amid expectations of future rate cuts by the Bank of England. Economic data showed declined retail sales and consumer price growth, prompting a recalibration of monetary policy expectations for 2025, alongside fiscal challenges influencing currency value.

The British pound has reached a fresh five-month low against the euro, according to recent market data. Despite gaining ground against a weakening dollar, the pound's dip is being attributed to investor anticipation of Bank of England rate cuts due to unfavorable economic indicators.

British retail sales saw a decline of 0.3% in December, against expectations of an increase, while consumer price growth measures also dropped. Market analysts predict four interest rate cuts by the BoE in 2025, heightening concerns over the UK’s fiscal trajectory and exerting downward pressure on sterling.

Market shifts are also influenced by broader international developments, including upcoming US policy announcements under President Trump, which add layers of complexity to currency valuations. Investors are closely watching forthcoming wage data and economic reports to gauge long-term impacts on monetary policy and fiscal strategy.

(With inputs from agencies.)