GBP remains on backfoot as BoE rate cut expectations deepen

GBP/USD Forecast: Dovish BoE bets could cap Pound Sterling’s rebound

GBP/USD stabilized near 1.2650 early Thursday after losing nearly 100 pips on Wednesday. Although the near-term technical outlook points to a loss of bearish momentum, the pair could have a difficult time rising steadily following the soft inflation readings from the UK.

Market positioning shifted toward an earlier Bank of England (BoE) policy pivot after the UK Consumer Price Index (CPI) readings for November came in below analysts’ forecasts on Wednesday. Goldman Sachs said that they now see the BoE opting for a 25 basis points rate cut in May, compared to June before inflation data. Read more…

Pound Sterling remains on backfoot as BoE rate cut expectations deepen

The Pound Sterling (GBP) struggles for a firm footing as a sharp drop in the United Kingdom Consumer Price Index (CPI) for November has deepened expectations of early rate cuts by the Bank of England (BoE). The GBP/USD pair is exposed to more downside as the Pound Sterling has lost its competitive advantage of a longer restrictive policy stance after a sharp decline in inflation.

BoE policymakers may continue favouring a restrictive policy stance until price stability is ensured, but market participants are expected to keep rate cut expectations alive. The next economic trigger for the Pound Sterling will be the Retail Sales data for November, which is scheduled for Friday. Higher-than-projected growth in consumer spending may bring some relief for the Pound Sterling. Read more…