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The British pound came under pressure on Monday after an influential member of the Bank of England’s Monetary Policy Committee said he’d be willing to set looser policy.
The pound GBPUSD, -0.7119% dropped 0.5% to $1.2996, from a level of $1.3063 seen late Friday in North American trading. That weakness helped spurred some gains for the FTSE 100 index UKX, +0.61% rose 0.4% to 7,619.90. A swath of FTSE 100 companies are multinational conglomerates and derive their revenue from overseas.
Gertjan Vlieghe, a member of the U.K.’s Monetary Policy Committee, said he’d vote for lower interest rates if data doesn’t show the economy perking up after last month’s general election, in an interview with the Financial Times on Sunday. “I really need to see an imminent and significant improvement in the U.K. data to justify waiting a little bit longer,” he said.
“It should be noted that Vlieghe is the third consecutive BoE official hinting toward a rate cut, after statements made by BoE’s [Silvana] Tenreyro on Friday and from BoE Gov. Mark Carney on Thursday,” said Peter Iosif, senior research analyst at IronFX Global, in a note to clients.
“Should the dark clouds of an imminent rate cut continue to gather over the pound we could see it weakening further,” he added, noting that he maintains a bearish outlook for cable — the pound versus the U.S. dollar. The next Bank of England policy decision will come Jan. 30.
Some airline-related stocks were under pressure, with shares of International Consolidated Airlines Group IAG, -0.39% slipping 0.4% and easyJet PLC EZJ, -0.57% fell 0.5%. Those losses come amid reports that European regional airline Flybe could be on the verge of collapse and that the U.K. government was looking into whether it can prevent that from happening.
Shares of FTSE-250-listed William Hill WMH, +0.49% rose 2.5% after the bookmaker said full-year adjusted operating profit is expected to be ahead of market and management expectations.
