Sterling's Slide: Awaiting the Bank of England's Verdict

Sterling experienced its largest daily drop in a month against the dollar, as anticipation builds for a Bank of England decision likely to cut interest rates. A 94% probability exists for a 25 basis point reduction. Concerns over inflation and economic stagnation influence investor sentiment.

The Sterling faced a notable slump against the dollar on Thursday, positioning itself for its largest daily decline in roughly a month. This comes as investors keenly await the Bank of England's meeting, where a cut in interest rates is anticipated.

According to market predictions, there is a substantial 94% likelihood that the BoE will reduce rates by 25 basis points, bringing them down to 4.5%. The pound, as a result, slipped 0.74% against the dollar to $1.2414, interrupting a three-day upward trend.

Though Sterling has rebounded slightly from a 14-month low, it remains on shaky ground. Michael Brown from Pepperstone highlighted that persistent inflationary pressures are restraining the BoE from aggressive rate cuts, as the market forecasts rate reductions will continue into the future.

(With inputs from agencies.)