The pound dipped to its lowest in six months against the dollar on Monday, as jitters across asset classes hurt the currency already bruised by markets’ reevaluation of the Bank of England’s rate outlook.The BOE kept rates on hold last week – the first meeting at which it had done so since December 2021 – on the back of signs economic growth is slowing.
Market pricing prior to that meeting had reflected expectations that a further 25 basis point rate hike was all but certain for 2023, if not at that specific meeting, but, on Monday, expectations for a further rate hike this year were roughly 40%. Sterling, on Monday, dropped as much as 0.25% to $1.2213 its lowest since March 2023, though later steadied to trade flat on the day at $1.2242