2023.11.2111:43:00UTC+00Pound Appreciates As BoE's Bailey Cautions Against Imminent Rate Cuts

The pound climbed against its most major counterparts in the European session on Tuesday, as investors reacted to comments from Bank of England Governor Andrew Bailey that it was too early to consider reducing interest rates.

Bailey told the National Farmers Union overnight that restrictive monetary policy stance would be necessary for "quite some time yet".

The BoE chief emphasized that it was too early to consider rate cuts, as some components of inflation remained far too high and as wage growth continues to rise.

Bailey added that the central bank was "on watch for further signs of inflationary persistence that may require interest rates to rise again".

Investors looked ahead to the release of minutes from Federal Reserve's latest meeting later in the day for additional clues on the rate outlook.

The pound advanced to 1.1088 against the franc and 0.8724 against the euro, setting 6-day highs. The pound may find resistance around 1.12 against the franc and 0.85 against the euro.

The pound was higher against the greenback, at a 2-1/2-month high of 1.2553. On the upside, 1.28 is likely seen as its next resistance level.

In contrast, the pound fell to near a 3-week low of 184.45 against the yen. If the currency falls further, 176.00 is likely seen as its next support level.

Looking ahead, Canada CPI and new housing price index and U.S. existing home sales, all for October, will be featured in the New York session.

The Fed minutes from the October 31-November 1 meeting will be released at 2 pm ET.