Greene’s comments reinforced expectations that rate cuts may not come this year.
Economists Downplay Chances of a Q4 BoE Rate Cut
Ahead of today’s labor market data, ING economists shifted away from expectations of a November BoE rate cut, stating:
“We no longer expect another Bank of England rate cut this year, though lower inflation and higher taxes should unlock further easing in 2026.”
ING economists expect further monetary policy easing in February, more dovish than market bets on an April rate cut, stating:
“We’ve taken out a November cut, but December is possible. However, we narrowly favor February for the next move, on the basis that headline inflation should be a little lower at the start of next year. In total, we expect three rate cuts in 2026.”
GBP/USD could gain traction as markets bet on Fed rate cuts in October and December and a BoE cut in April. The US-UK interest rate differential could shift in favor of the Pound if this scenario plays out. US interest rates would drop to 3.75%, while UK rates would remain at 4%, potentially sending GBP/USD higher.
Markets responded swiftly, putting sterling under pressure amid rising unemployment.
GBP/USD Dips After Labor Market Data
Ahead of the labor market report, GBP/USD fell to $1.33227 before briefly rebounding to $1.33521. After the release, the pair rose to $1.33409 before falling to a low of $1.33075. On Tuesday, October 14, the GBP/USD was down 0.18% to $1.33079. Initial market reaction to rising wages and higher unemployment suggested traders increased dovish BoE bets.