Pound, UK stocks get a lift from BoE's rosy rate view
BoE's second rate cut since 2020
Sterling rallies sharply; 2024's best major currency performer
BoE's Bailey now sees inflation returning to target mid-2027
Sterling may lose sheen if markets start to expect faster rate fall
Updates with comments, adds graphic; refreshes prices at 1452 GMT
By Yoruk Bahceli and Amanda Cooper
LONDON, Nov 7 (Reuters) -Sterling rallied sharply on Thursday, solidifying its position as the best performing major currency of 2024, while UK-focussed stocks rose after the Bank of England cut rates but indicated future cuts may be more gradual than many had thought.
The BoE, which delivered its second rate cut since 2020, said that after Labour Party finance minister Rachel Reeves' high-tax, high-spend budget last week, it expected higher inflation and growth.
London-listed shares of mid-sized companies touched session highs .FTMC, while UK government bonds headed for their best one-day performance in almost a month, reflecting investor demand for sterling-denominated assets.
Sterling rose by as much as 0.78% to $1.298 after the decision GBP=D3, while two-year gilt yields fell 6 basis points to 4.448%, as bond prices rose GB2YT=RR.
The Monetary Policy Committee (MPC) voted 8-1 to cut rates to 4.75% from 5%, a stronger majority than expectations in a Reuters poll for a 7-2 vote in favour of a cut.
The BoE predicted last week's budget, which contained big increases in tax, spending and borrowing - would boost the size of Britain's economy by around 0.75% next year but barely improve annual growth rates in two or three years' time.
It said the budget was likely to add just under half a percentage point to the rate of inflation at its peak in just over two years' time, causing inflation to take a year longer to return sustainably to its 2% target.
Right now, money markets show traders believe UK rates could fall by just over half a percent next year - something economists and analysts believe is too tame, given the BoE's predictions predate the rise in gilt yields and the shift in market borrowing rates following the budget.
"Remember, markets are pricing fewer than three rate cuts from here on in," James Smith, developed markets economist - UK, at ING said.
"We don't think that sounds particularly realistic. Our view is that rate cuts will be cut at every meeting from February until rates reach 3.25% next autumn."
British inflation has proven far more stubborn than that in other developed nations, particularly where wages and the services sector are concerned.
Governor Andrew Bailey said the BoE now saw inflation returning to target by mid-2027, from a previous estimate of mid-2026.
“That information was made less useful because it probably wouldn’t look quite like that if they took into account the market’s repricing in the wake of the budget,” Rabobank senior rates strategist Lyn Graham-Taylor said.
UK rates remaining higher for longer and then falling more slowly than elsewhere has been a key driver for sterling.
The pound is the best-performing major currency against the dollar this year, up 2% with Thursday's rally.
Sterling could lose that sheen, especially if markets adjust to the view that British rates could fall faster, analysts said.
"I think that will become clear as peers, such as the U.S., begin to outpace the UK to a more significant degree, although the near-term sugar rush from the Budget might mask that for a short while," Pepperstone senior research strategist Michael Brown said.
Sterling ahead of the pack https://reut.rs/4fCjjtC
Britain's inflation and interest rates https://reut.rs/4fwDybO
Additional reporting by Samuel Indyk; Editing by Alun John, Dhara Ranasinghe and Ros Russell
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
