Pound Weakens As China Growth Concerns Linger

(RTTNews) - The pound dropped against its major rivals in the European session on Tuesday, as modest cuts in China's loan prime rates failed to inspire investors.

China's central bank trimmed two key benchmark interest rates in a bid to counter the post-COVID growth slowdown in the world's second-largest economy.

The People's Bank of China cut two key policy rates, including a benchmark for corporate loans and another used to price mortgages by 10 basis points each, the first such reductions in 10 months in an effort to bolster economic growth.

UK inflation report is due on Wednesday. Inflation is expected to ease to 8.5 percent in May from 8.7 percent last month, but the core CPI is forecast to remain at 6.8 percent.

The Bank of England will announce its interest rate decision on Thursday, when it is expected to deliver a 25 basis-point hike to attain the price stability target.

Fed chair Jerome Powell is scheduled to testify on the semi-annual monetary policy report before Congress on Wednesday and Thursday.

The pound dropped to 5-day lows of 1.2760 against the greenback and 0.8566 against the euro, off its early highs of 1.2806 and 0.8527, respectively. The next possible support for the currency is seen around 1.24 against the greenback and 0.88 against the euro.

The pound was lower against the yen, at a 4-day low of 180.42. If the pound drops further, it may find support around the 175.00 area.

The pound eased to 1.1443 against the franc, from an early 6-month high of 1.1488. This may be compared to its previous 4-day low of 1.1441. The currency may locate support around the 1.12 level.

Looking ahead, U.S. building permits and housing starts for May are slated for release in the New York session.