LONDON, Sept 15 Sterling fell on Thursday as
investors awaited the Bank of England announcement on interest
rates when it is likely to reiterate that monetary policy will
remain accommodative in the coming months.
That is despite the economy holding up pretty well in the
aftermath of the shock Brexit vote in June. Data on Wednesday
showed that the labour market was resilient and business
sentiment surveys earlier this month showed a bounce in
On Thursday, retail sales data for August is due at 0830 GMT
and while it is likely to show a 0.4 percent drop from a month
earlier, it is still up 5.4 percent from a year ago.
Sterling was down 0.15 percent at $1.3220, having
fallen to $1.3139 on Wednesday, its lowest in two weeks. The
euro was flat at 84.95 pence.
At its 1100 GMT announcement, analysts expect the BoE's
monetary policy committee (MPC) to reiterate that the Brexit
uncertainty will drag on the economy as Britain and the EU
thrash out a new relationship over the next couple of years. The
Bank last month cut interest rates to record lows and
reintroduced an asset-purchase programme.
Under the MPC's new calendar, the Bank's next rate decision
is scheduled to take place on Nov. 3. That is when economists
expect it to cut borrowing costs to around 0.1 percent.
"A better run of survey data has seen expectations of a 15
basis points rate cut in November drop to around 20 percent,"
said Chris Turner, head of currency strategy at ING. "Today's
BoE meeting could put that back on the agenda and send
euro/sterling back to 85.75. UK retail sales could also
The pound has broadly stabilised in the past month, holding
above 1.30 against the dollar, but more political noise is
likely to be generated when EU leaders meet on Friday in
Bratislava, where conditions for Britain's departure from the
bloc will be high on the agenda.
The pound hit a seven-week high of $1.3445 a week
ago, more than 5 percent above the three-decade low plumbed in
July soon after the EU referendum, as investors trimmed record
short positions against the currency.
But since then, with BoE Governor Mark Carney leaving the
door open to more monetary easing, sterling has shed ground.
"The BoE can be expected to hold fire at today's meeting,"
said Esther Reichelt, currency strategist at Commerzbank. "It
would be wrong, though, to be considerably more optimistic in
view of the good economic data following the Brexit referendum.
The uncertainty triggered by the outcome still prevails, and we
see no reasons for a stronger pound."
(Reporting by Anirban Nag; Editing by Raissa Kasolowsky)