Sterling declines to three-month low on UK interest rate forecasts

Sterling fell in European trade on Tuesday, sharpening losses against US dollar for sixth straight session and plumbing a three-month trough on UK interest rate speculation.

Bank of England is preparing for a 0.25% interest rate hike this week, which could be the last rate hike in the current policy tightening cycle as the UK economy experiences a sharp slowdown.

GBP/USD fell 0.1% to $1.2370, the lowest since June 6, after losing 0.1% yesterday, the fifth loss in a row on UK recession concerns.

Bank of England

Bank of England is convening on Thursday to discuss monetary policies and economic conditions, expected to raise interest rates by 25 basis points to 5.5%.

This could very well be the last interest rate hike of this policy tightening cycle. 

BOE Governor Andrew Bailey said this month "The BOE is pretty close to ending its cycle of interest rate hikes according to current evidence".

UK Inflation

Later today, important UK consumer prices data will be released and will influence the decision by Bank of England.