Pound Slips vs. Dollar; Focus on BoE Governor Bailey's Speech

The British Pound Falls Before Governor Bailey's Speech

Bailey is scheduled to speak at 1845 GMT.

Lower-than-expected UK inflation may lead to a dovish tone.

The British Pound, traded as GBPUSD, slightly declined against the US Dollar on Wednesday, while it remained stable against the Euro. Traders are now eagerly awaiting the speech by the Bank of England Governor, Andrew Bailey, which may influence expectations for the central bank's interest rate path.

The Pound currently fell by 0.14% to $1.2967, slightly above the new low of $1.2945 reached in the previous session since August 19.

The decline of the Pound is largely due to the strengthening of the US Dollar. Traders are currently reallocating positions to reflect the view that the pace of interest rate cuts by the Federal Reserve may be slower than anticipated a few months ago.

Tariff proposals are seen as potentially causing a rise in US yields and a strengthening of the Dollar.

On the UK front, attention is focused on Bailey's speech at the International Monetary Fund (IMF) at 1845 GMT.

Commonwealth Bank of Australia (CBA) currency strategist Carol Kong said, "We believe the main risk is that Bailey's speech leans dovish, due to the September Consumer Price Index (CPI) being lower than expected."Last week's data indicated that the UK's CPI in September rose 1.7% year-on-year, marking the smallest increase since April 2021.

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At present, the market expects the Bank of England to almost certainly cut interest rates in November and considers there is a possibility of further rate cuts in December, although there is no certainty.

The British pound against the euro, EURGBP, remained almost unchanged at 0.8314 pounds.

Investors' attention is also focused on the UK budget on October 30th, with Chancellor of the Exchequer Rachel Reeves facing the formidable task of increasing taxes to boost investment in public services and new infrastructure.