LONDON, Nov 7 Reuters The pound rose on Thursday ahead of a Bank of England rate decision, although trading was still mostly dominated by the reverberations of Donald Trump39;s win in the U.S. presidential elections that fuelled a huge dollar rally.
The BoE is widely expected to cut rates at this meeting, although what happens after that is less clear, after last week39;s hightax, highspend budget that economists see as inflationary.
Sterling was last up 0.46 at 1.2939, having posted its biggest oneday fall against the dollar since March 2023 the previous day, following Trump39;s clear win over Democrat rival Kamala Harris that prompted investors to dive into U.S. assets that are likely to benefit from the Republican39;s America First agenda.
Back in the United Kingdom, the pound and gilts came under fire last week after finance minister Rachel Reeves delivered her first budget, which contained 40 billion pounds 51.74 billion in tax rises, as well as an increase in spending of around 70 billion pounds in the coming five years.
The Office for Budget Responsibility, Britain39;s official budget forecaster, believes growth but also inflation will rise more quickly over the coming few years.
Consumer prices look to rise by 2.6 in 2025, according to the OBR39;s forecasts, considerably above the BoE39;s 2 target, largely because of the budget.
In our view, the OBR projections are way too optimistic. It39;s the monetary policy report month, and it would be interesting to…