Sterling Slides: Inflation Data Signals Rate Cut

Sterling tumbled as British inflation unexpectedly plunged, ahead of a Bank of England meeting where an interest rate cut is anticipated. November saw inflation drop to 3.2% from 3.6%. Meanwhile, U.S. inflation data is awaited for clues on the Federal Reserve’s moves, following soft employment data.

Sterling experienced a significant drop on Wednesday, following an unexpected sharp decrease in British inflation rates, signaling a potential interest rate cut by the Bank of England on Thursday. Investors quickly adjusted their positions in anticipation of the central bank's upcoming decision.

Official data revealed that the British consumer price inflation fell to 3.2% in November, marking its lowest point since March and decreasing from 3.6% in October. This decline in inflation supports economists' expectations of an imminent rate cut by the BoE, amidst moderating wage growth and easing price pressures.

In the forex market, the dollar maintained its strength with traders focused on the forthcoming U.S. inflation data, hoping for insights into the Federal Reserve's future policy directions. Meanwhile, central banks worldwide are preparing for critical policy meetings, influencing global currency and financial markets dynamics.

(With inputs from agencies.)