Green’s comments reinforced expectations that there may not be a rate cut this year.
Economists downplay prospects of Q4 BoE rate cut
Ahead of today’s labor market data, ING economists shrugged off expectations of a BOE rate cut in November, saying:
“We no longer expect another Bank of England rate cut this year, although low inflation and higher taxes should provide further relief in 2026.”
Economists at ING expect further monetary policy easing in February, which is more dovish than market bets for a rate cut in April, they say:
“We have a cut in November, but December is possible. However, we favor February for the next move, on the basis that headline inflation should ease slightly early next year. Overall, we expect three rate cuts in 2026.”
GBP/USD may rise as the market is betting on Fed rate cuts in October and December and BOE cuts in April. If this scenario plays out the US-UK interest rate differential could shift in favor of the pound. US interest rates will drop to 3.75%, while UK rates will remain at 4%, potentially pushing GBP/USD higher.
Markets reacted quickly, putting pressure on sterling amid rising unemployment.
GBP/USD falls after labor market data
Ahead of the labor market report, GBP/USD fell to $1.33227 and then briefly recovered to $1.33521. Following the release, the pair rose to $1.33409 before falling to a low of $1.33075. On Tuesday, October 14, GBP/USD was down 0.18% at $1.33079. The early market reaction to rising wages and high unemployment showed traders increased dovish BoE bets.
