Russia and Kazakhstan: the beginning of a trade war?

On Thursday, the pound sterling fell by more than 1% against the euro and the US dollar, reaching a three-week low. This happened after statements by the head of the Bank of England, Andrew Bailey, in an interview with The Guardian. 

He noted that the British central bank may act «more aggressively» in lowering interest rates if positive trends in inflation persist.

Bailey stressed that the UK economy has turned out to be more resilient than expected two years ago. He added that the economy has survived the last five years better than expected, and it has potential for development. Bailey also highlighted three key structural challenges facing the country: an aging population, the need to increase defense spending, and the fight against climate change.

The pound is trading at $1.3114, whereas in the previous session it closed at $1.3266. Relative to the euro, the exchange rate was 0.8417 pounds against 0.8326 a day earlier.

Futures on the base rate indicate the probability of a 25 basis point reduction in the base interest rate by the Bank of England next month, and the possibility of a similar reduction in December is estimated at 40%. Recall that in September, the Central Bank left the rate at 5% per annum, after reducing it by 25 basis points in August.