The pound completes the worst month since September 2023

The British currency in October showed the largest drop against the dollar since September 2023, losing about 3% amid expectations of monetary easing by central banks.

Although representatives of the Bank of England are taking a cautious approach to lowering rates, the head of the regulator, Andrew Bailey, said that inflation is slowing due to the base effect. At the same time, committee member Catherine Mann noted that there is a «long way to go» to achieve the 2% inflation target.

On Monday, the GBP/USD pair strengthened slightly, trading around 1.2978 due to the weakening of the dollar. Nevertheless, in general, the pound continues to be under pressure due to low inflation and expectations about the upcoming budget, which the new Labor government will present on October 30.

British bond yields also rose in response to reports of a possible expansion of government borrowing in the new budget, which may affect the pace of rate cuts by the Bank of England. Analysts believe that the expected increase in the minimum wage and the growth of domestic demand in 2025 may increase inflationary pressures and increase the burden on consumers, which will slow down the expected policy easing.