LONDON, Dec 8 (Reuters) - The pound dipped on Monday, although volatility remained contained, as investors prepared for an action-packed week that, among other things, could bring a U.S. rate cut.
Sterling climbed to six-week highs last week, helped by relief that finance minister Rachel Reeves’ budget was better received than feared and by expectations that the dollar will stay under pressure if the Federal Reserve signals further rate cuts beyond December’s widely anticipated move.
The pound was last down 0.1% on the day against both the dollar and the euro, which traded at $1.3325 and 87.45 pence, respectively.
UK economic growth figures for October are due on Friday. A Reuters poll of economists offers a forecast for a rise of 1.4% from the same month last year and a rise of 0.1% over the September reading, which was skewed by a cyberattack at Jaguar Land Rover that shut down production at the automaker, thereby hitting national growth.
"Overall, some good news for the UK economy could be on the cards this week, although we continue to think that the underlying trend is for the economy to stall in the coming months," XTB research director Kathleen Brooks said.
Money markets show traders are placing a roughly 87% chance of the Bank of England cutting rates by a quarter point to 3.75% when it meets on December 18. What happens after that is less clear. There is one more cut priced in the first half of 2026 and then the BoE is expected to be in hold mode, like most other major central banks.
Reporting by Amanda Cooper; Editing by William Maclean
