Pound Sterling Price News and Forecast: GBP/USD falls to new multi-year low after disappointing data
|GBP/USD Forecast: Fiscal measures not enough to support British pound
GBP/USD has staged a modest rebound toward 1.1200 after having slumped to its weakest level since 1985 near 1.1150. The British government had unveiled an expansive program of tax cuts to support the economy but the positive impact of this development on the pound seems limited for now.
On Thursday, the Bank of England (BoE) announced that it raised its policy rate by 50 basis points (bps) to 2.25%. Since futures markets were pricing a strong probability of a 75 bps hike, the initial market reaction forced GBP/USD to come under bearish pressure. In its policy statement, "UK energy price guarantee will significantly limit further inflation rises, support demand relative to august forecasts," the BoE noted. Read more ...
GBP/USD outlook: Sterling falls to new multi-year low after disappointing data
Cable accelerates below 1.12 mark on Friday and hit new lowest since 1985, in extension of steep bear-leg from 1.1738 (Sep 13 lower top), which is a part of larger downtrend from 1.4249 (June 2021 peak. The action in Asian and early European trading has registered a fall of 0.8%, as the pair is on track for a second straight significant weekly loss (over 2% so far).
Persisting safe haven flows on fears of escalation geopolitical situation, weakening economy and signals that the Fed will remain aggressive regarding its monetary policy, continue to deflate pound. The latest economic data from UK, further weakened the sentiment as services PMI fell below 50 threshold in September (49.2 vs 50.9 in Aug) with Sep figure being the lowest since January 2021, while manufacturing sector performed better than expected in September (48.5 vs 47.3 f/c) but stays in the territory that points to contraction. Read more ...
GBP/USD plummets to mid-1.1100s, lowest since 1985 amid relentless USD buying
The GBP/USD pair prolongs its recent bearish trend and weakens further below the 1.1200 mark, hitting its lowest level since 1985 during the early European session on Friday. The downward trajectory picks up pace following the release of flash UK PMIs and drags spot prices to mid-1.1100s.
A 50 bps rate hike by the Bank of England on Thursday disappointed market participants anticipating a more aggressive policy tightening. Furthermore, UK Prime Minister Liz Truss' energy relief package for households and businesses could help slow inflation and has set the stage for a dovish pivot from the UK central bank. This turns out to be a key factor that continues to undermine the British pound amid the looming recession risk. Read more ...
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