Pound reacts as Andrew Bailey tells Guardian borrowing costs could fall if inflationary pressures continue to ease

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The pound has fallen sharply after the governor of the Bank of England told the Guardian it could become a “bit more aggressive” in cutting interest rates if inflation continues to cool.

Andrew Bailey said he was encouraged that cost of living pressures had not been as persistent as feared, but warned the Bank was monitoring the Middle East crisis amid fears of an oil price shock.