Sterling's Struggle Amid Budget Concerns and Global Currency Dynamics

Sterling faced volatility as Bank of England comments highlighted inflation concerns, while traders anticipated a potential rate cut amid a shaky British economy. The pound's value was affected by international currency movements, including a robust U.S. dollar and economic challenges in Europe and Japan.

Sterling attempted a modest recovery on Thursday after Bank of England policymaker Catherine Mann flagged ongoing inflation concerns in Britain, though the pound remained pressured by the strength of the dollar and other major currencies.

Expectations of a 25 basis point BoE rate cut by April have gained traction as traders grapple with an uncertain economy and impending budget announcements, which have weighed heavily on sterling. The pound dropped 0.20%, reaching its lowest since September, also declining against both the euro and the yen.

Meanwhile, the U.S. dollar's rise was fueled by political destabilization in Paris and changes within Japan's ruling party. As the British housing market stagnates and business confidence wanes, attention turns to finance minister Rachel Reeves's budget, which could introduce tax hikes that might destabilize the fragile economy further.

(With inputs from agencies.)