In the wake of robust UK inflation data, the likelihood of a Bank of England (BoE) rate cut in the first half of the year has dwindled, resulting in a surge for the Pound Sterling (GBP). Analysts at ING delve into the GBP outlook, emphasizing the impact of BoE repricing on the currency.
Investors responded by withdrawing approximately 20 basis points (bps) from the projected 2024 Bank of England easing cycle on Wednesday. This shift provided broad support for the Sterling across various currency pairs.
The recalibration of expectations prompts a reevaluation of EUR/GBP forecasts by ING, with the current projections of a rise to 0.8800 later this quarter and 0.9000 later this year appearing overly ambitious in light of recent developments.
Furthermore, the positive inflation data played a pivotal role in stabilizing GBP/USD, preventing it from slipping below the 1.2600 support level on Wednesday. Analysts anticipate a near-term trading range of 1.2600-1.2800 for GBP/USD until the broader trend of the US Dollar reaches a resolution. The dynamics of the Pound Sterling reflect the intricate interplay between economic indicators and central bank policy, offering investors a nuanced perspective on currency movements in the coming months.
