Home / Business / Sterling slips off after BOE executives believe that uncertainty over Brexit could mean a rate cut

Sterling slips off after BOE executives believe that uncertainty over Brexit could mean a rate cut

The pound fell below $ 1.23 against the dollar after a Bank of England policy maker said the next move for the central bank could be a rate cut.

Speaking to local companies in the north of England, Bank of England political decision maker Michael Saunders said Britain could consider lowering interest rates if uncertainty surrounding Brexit persists.

"If the UK avoids a no-deal Brexit, monetary policy could go both ways, and I think it's quite plausible that the next rate hike will be lower than higher," Saunders told Reuters on Friday

The British currency fell more than 0.4% against the dollar on these comments, trading at $ 1

.228. Sterling has fallen more than 3% since the beginning of the year and more than 1% since the UK left the European Union in June 2016.

Last week the Bank of England held Interest rates remained stable, but warned that a renewed delay in the UK's departure date could lead to further economic weakness.

"It is possible that political events could lead to another phase of uncertainty about the nature and transition to the United States The future trade relationship of the United Kingdom with the European Union," the bank said in a press release.

Saunders, meanwhile, said the Brexit uncertainty would persist even if a Brexit were avoided without an agreement kind of "slow puncture" for the British economy.

"In this case, maintaining a very accommodative monetary policy stance for a longer period of time and easing policy at some point in time, especially if global growth remains disappointing,

The CME Group The BOE Watch tool estimates the likelihood of a rate cut at the central bank meeting to be 8% in early November, with most investors not expecting a change in borrowing costs less than a week after the UK's scheduled departure date.

Prime Minister Boris Johnson has Promised to give up Brexit by October 31, "whatever comes," even if it means no deal is made.

A "no-deal" Brexit is considered by many inside and outside Parliament An "edge" scenario that must be avoided at all costs.

If an agreement does not apply This means a sudden exit from the EU without a transitional period, so that companies can adapt to life outside the block on a relaxation path.

Central Banks

Central Banks Worldwide, monetary policy has eased after low inflation, slow growth and a looming recession.

Earlier this month, the Federal Reserve announced that interest rates would fall to a target range of 1.75% to 2%, but there was little evidence that further cuts would follow in the coming months.

The European Central Bank cut interest rates by 10 basis points to -0.5%, a record low, but in line with market expectations.

– Sam Meredith and Reuters of CNBC contributed to this report.

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