PoundSterlingLIVE - A tough day for the British Pound was made tougher by the Bank of England Governor Andrew Bailey who was keen to stress the end of the interest rate hiking cycle was now close at hand.
Appearing before members of Parliament, Bailey said the Bank of England was "much nearer now to the top of the cycle", which meant he believed the peak in interest rates was close.
"I'm not saying we’re at the top because we’ve got a meeting to come, but I think we are much nearer to it on interest rates on the basis of the current evidence," he said.
The call reaffirms market expectations that another 25 basis point interest rate hike in September could prove to be the final hike of the current cycle.
The Pound was struggling ahead of Bailey's appearance before Parliament's Treasury Select Committee and his observations triggered renewed selling.
The Pound to Euro exchange rate fell 0.45% on the day to 1.1665, the Pound to Dollar exchange rate meanwhile fell half a per cent to test the key 1.25 marker as a run of weakness looked set to extend.
Bailey said he expects a marked fall in inflation from here. "The fall in inflation will continue... and I think will be quite marked by the end of this year."
The market entered the testimony by Bailey and Monetary Policy Colleagues expecting to full 25 basis point interest rate hikes before the end of the year.
But the comments will draw doubts on whether a November rate hike will follow that of September, which remains a sure bet amongst market participants.
The fall in the Pound reflects these waning expectations.
An original version of this article can be viewed at Pound Sterling Live
