Pound Sterling remains delicate on stubborn inflation and weak demand outlook
The Pound Sterling (GBP) faces selling pressure as investors start worrying about the United Kingdom’s weak economic outlook and upside risks to inflation on Albion’s shores. The GBP/USD pair came under severe pressure after an unexpected pause in the policy-tightening spell by the Bank of England (BoE) last week. The GBP/USD outlook weakens as a sudden skip in the rate-tightening regime by the UK central bank against expectations of an interest rate increase signaled risks of economic slowdown.
The UK economy is seen losing strength amid uncertainty over the interest rate outlook ahead of general elections. UK PM Rishi Sunak promised to halve inflation to 5.3% by year-end, but a pause announced by BoE policymakers indicates that the authority may fail to keep the word. Read more…
GBP/USD Forecast: Pound Sterling eyes a test of 1.2200
GBP/USD came under bearish pressure in the early European session and dropped to its lowest level since March below 1.2230. The negative shift seen in risk sentiment seems to be helping the US Dollar gather strength and weighs on the pair.
News of China’s Evergrande halting new debt issuance due to an ongoing investigation into its main domestic subsidiary, Hengda Real Estate Group Co Ltd, caused investors to move away from risk-sensitive assets in the Asian session. Following the sharp decline seen in major Asian equity indices, the UK’s FTSE opened deep in negative territory, reflecting the souring market mood. Read more…