Pound drops sharply on rate cut

The rate cut by the Bank of England was the culprit.

It was the first cut in 4 years.

Note – lower interest rates tend to weaken a currency.

Financial markets are predicting there is a 75% chance the Bank of England will cut rates again in November.

But that might be all that happens for a while. The Bank of England is still very cautious – inflation is a tough beast to tame.

The Bank’s own documents show they expect interest rates to still be up at 3.5% in 3 years’ time.

And there are plenty of signs the UK economy is gathering a bit of speed – which could fuel inflation and prevent more cuts.

For now, the Pound has to take it on the chin. It was coming, it was just a case of when.

Interest rates decisions are likely to be a key driver of exchange rates for the remainder of 2024.

The US could be next to cut – they’ve dropped plenty of hints.

And the EU is expected to cut again in September.

It’s why it’s always important to keep up-to-date with the latest news and events.

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