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Money markets trim bets of a BOE rate cut next year

Money markets trim bets of a BOE rate cut next year
FILE PHOTO: The Bank of England is seen in the financial district during rainy weather in London, Britain, September 23, 2018. -
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Henry Nicholls(Reuters)
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LONDON (Reuters) – Market expectations of the first quarter point rate cut from the Bank of England has shifted to December 2020 from March next year as hopes that Britain and the European Union may be able to break a Brexit deadlock have grown.

Bets of a breakthrough have grown after British Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar said they saw “a pathway to a possible deal” on Thursday, fuelling a rally in the pound.

Any Brexit deal would reduce the pressure on the central bank to cut interest rates to boost a struggling economy which has been dogged by uncertainty since a Brexit referendum vote in June 2016.

Earlier this week, expectations of a rate cut by March 2020 was firmly baked into money markets. That has dwindled to about 60% currently. <BOEWATCH>

(Reporting by Dhara Ranasinghe; Editing by Olga Cotaga)

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