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The immediate reaction would probably be to sell sterling, especially as many traders are quite long sterling (the pound had been moving up earlier in 2014 on the expectation of a rate rise).
There had been little expectation of a rate hike then.
Similar(58)
Investors lowered their expectations of a rate cut in January.
Expectations of a rate increase have recently fallen.
Expectations of a rate cut have been lowered in recent weeks.
The Reserve Bank appears in no hurry to ease interest rates despite rising expectations of a rate cut before Christmas.
It is nearly impossible to determine the motivations of central bankers, but many analysts saw the retrenchment as an attempt to tamp down expectations of a rate increase.
Expectations of a rate increase have faded in recent weeks because of rising concern about the economic fallout of the global crisis in the credit markets.
Khalaf said: "Given the direction central bank policy in the US appears to be going, expectations of a rate rise could also be weighing down on gold".
On Oct. 24 and Oct. 25, the euro rose above $1.38 — nearly a two-year high — before slipping back on expectations of a rate cut.
The president of the European Central Bank, Jean-Claude Trichet, talked down expectations of a rate increase, suggesting that energy-driven inflation would be transitory.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com