Forex Flash: GBP/USD potential decline towards 1.5780 – Rabobank (Barcelona) - The sterling is navigating the lower end of today’s range, bottoming in the boundaries of 1.5840 so far. The dovish tone out of the BoE’s Quarterly Inflation Report and the later speech by Governor M.King have weighted on GBP, threatening to breach a three-month low after the prospects for economic growth were slashed and the expected UK inflation is now higher for the upcoming periods.

Jane Foley, Senior Currency Strategist at Rabobank assesses “There is little doubt that the headwinds facing the UK economy remains severe… Against this backdrop we expect that the MPC will vote in favour of more QE by the publication of the February inflation report. The overall degree to which sterling will be impacted by the fear of more QE over the coming months depends to a large part on whether there is fear of further policy action from the Fed or the ECB – both of which is possible… The combination of the 100 and 200 smas at GBP/USD 1.5851/75 is support, below to herald a faster fall towards the USD1.5780 region”.