GBP/USD: Sterling slides after dovish bailey comments

The pound (GP/USD) is under pressure this morning, declining to $1.2616 against the dollar after dovish commentary from Bank of England Governor Andrew Bailey yesterday. Sterling initially jumped to $1.2668 following Bailey’s remarks but soon reversed course.

The BoE chief said he would be comfortable with investors betting on UK interest rate cuts this year, though he pointed to early signs of economic recovery after the country fell into recession in late 2023. Bailey sounded more dovish than before, prompting analysts to forecast an August start for the central bank’s easing cycle.

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Gold edges higher ahead of Fed minutes; prices remain rangebound

With the dollar bid today ahead of the Federal Reserve’s January meeting minutes, sterling faces additional headwinds. Although Fed policymakers have stressed that rates need to stay higher for longer, markets seem to be in wait-and-see mode.

The pound has remained in a tight range since early February. Further Fed speaker comments this week could spark renewed dollar strength and add extra pressure on sterling.