British Pound Exhibits a Rare Combination of Monetary and Macro Factors Pointing to Its Further Weakening

On Thursday, November 7, the Bank of England: as expected, cut interest rate by 25 basis points despite the fact that the massive budget package from the Labour Party clouded the prospects for further policy easing. Thus, the cost of borrowing was lowered from 5% to 4.75%.

The latest data showed that the UK unemployment rate rose more than expected, while wage growth slowed but was slightly lower than expected. The unemployment rate rose to 4.3% in the three months to September from 4% in the previous quarter. After the data was released, the pound fell from 1.2825 to a three-month low of 1.2800 against the dollar.

A combination of further UK rate cuts alongside worsening economic data — gives an unequivocal hint at a very high chance of further GBPUSD weakening.