Pound Sterling Price News and Forecast: GBP/USD subdued in mid-1.2300s pre-US CPI

GBP/USD Forecast: Near-term technicals turn bullish

GBP/USD has gathered recovery momentum early Wednesday after having tested 1.2300 on Tuesday. The technical picture in the short term points to a bullish tilt but the dollar's market valuation is likely to continue to drive the pair's action.

Despite the risk-positive market environment during the European trading hours on Tuesday, the more-than-5% decline witnessed in the 10-year UK government bond yield made it difficult for the British pound to find demand. With the greenback coming under selling pressure on Wednesday, however, the pair started to edge higher. Read more...

GBP/USD subdued in mid-1.2300s pre-US CPI, despite negative Brexit headlines

Despite the increasingly concerning tone to Brexit newsflow, with the EU threatening to revoke its trade deal with the UK should the latter unilaterally scrap the Northern Ireland Protocol (as it has been jawboning about this week), and despite a UK-based economic think tank forecasting that the UK will be in a technical recession in the second half of this year, GBP/USD continues to trade in a stable fashion in the mid-1.2300s and is well with recent intra-day ranges.

After recent big moves to the downside, some are arguing that a lot of pessimism about the UK economy (and thus the outlook for BoE monetary policy tightening), is already in the price, limiting the scope for further near-term downside in cable. Meanwhile, subdued FX market trade in the run-up to key US Consumer Price Inflation data at 13:30 BST should not be too surprising. Traders tend to refrain from placing big bets ahead of big, potentially market-moving events. Read more...

GBP/USD to continue its downward trend in the months ahead – HSBC

The Bank of England (BoE) hiked its policy rate by 25bp but it maintained guidance that further tightening “might” still be appropriate and cut its medium-term inflation forecasts. The bigger picture for the GBP remains challenging, which may not improve anytime soon, in the view of economists at HSBC.

“The BoE hiked its policy rate by 25bp to 1.00%. However, we think that the BoE has stuck to its dovish guns in many ways. First, the BoE kept its guidance unchanged. The BoE’s latest forecasts also underline the dovish case. For example, the BoE now forecasts economic contraction of 0.25% in 2023 and cuts its medium-term inflation forecast to just 1.3%, well below its 2% inflation target. These forecasts suggest that the BoE might not be able to deliver the degree of rate hikes priced by the market.” Read more...