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Sterling loses ground as BoE's Vlieghe hints at rate cut

By Michele Maatouk

Date: Monday 13 Jan 2020

Sterling loses ground as BoE's Vlieghe hints at rate cut

(Sharecast News) - Sterling was under pressure on Monday after Bank of England policymaker Gertjan Vlieghe suggested that he would vote for an interest rate cut this month.
Speaking to the Financial Times over the weekend, Vlieghe said he would vote for a rate cut later this month if key economic data don't show a recovery in the economy after the December election.

"Personally I think it's been a close call, therefore it doesn't take much data to swing it one way or the other and the next few [MPC] meetings are absolutely live," he told the FT. "I really need to see an imminent and significant improvement in the UK data to justify waiting a little bit longer."

At 0915 GMT, the pound was down 0.5% against the dollar at 1.2994 and 0.6% weaker versus the euro at 1.1675.

Neil Wilson, chief market analyst at, said: "A dule of doves? Or a cote of doves? Either way, they're gathering at Threadneedle Street. A cut is coming.

"MPC member Gertjan Vlieghe said he'd like vote to cut if data doesn't show a turnaround sharpish. He's joined Carney and Tenreyro in arguing that more stimulus may be needed sooner rather than later. One senses the Bank doesn't want to get behind the curve and is seeking to get a jump on markets whilst still teeing up the cut.

"Michael Saunders - who along with Jonathan Haskell has voted to cut at the last two MPC meetings - speaks on Wednesday and will no doubt reiterate his belief a cut is needed now."

Wilson said doubts about the UK's ability to negotiate a trade deal with the EU this year are also weighing on the pound.

Michael Hewson, chief market analyst at CMC Markets, said:"With rates already close to record lows and global demand now starting to show signs of picking up, a 25 basis points rate cut is unlikely to make much difference, and in any case is already priced in by markets so would in all probability make no difference at all."

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