Sterling Slides as BoE Flags Potential for Quicker Easing

The British pound tumbled to its lowest in three weeks after BoE Governor Andrew Bailey indicated that interest rate cuts could come sooner if the labor market continues to weaken. The pound fell to $1.3467 before a modest recovery.
Bailey pointed to growing slack in the economy and higher employer taxes as contributors to the downturn. He reiterated a cautious approach but made clear that rates, now at 4.25%, are likely to fall further.
GDP data revealed contractions in April and May, fueling investor anxiety. The latest KPMG report showed the sharpest hiring decline in nearly two years, reinforcing concerns about the labor market.
Money markets now see an 85% probability of a rate cut in August, highlighting the government’s challenge as inflation remains above target and living standards fall.