The pound faces downward risk, the market may underestimate rate cut expectations.

Derek Halpenny of Mitsubishi UFJ Bank stated in a report that the pound may fall in the coming months, as the pricing for further interest rate cuts by the Bank of England appears inadequate. He mentioned that comments made by Bank of England Governor Andrew Bailey and other policymakers to the Treasury Select Committee on Tuesday suggest that the outcome of the decision on March 19 is difficult to predict. The next employment report will be crucial for this decision. He stated that if data continues to show a gradual slowdown in the labor market, it is highly likely that there will be an interest rate cut at that time. He mentioned that with the inflation rate expected to drop to target levels in May, there is a high possibility of another rate cut in June. The pound rose 0.2% to $1.3513, while the euro fell 0.1% to 0.8720.