The Bank of England (BoE) raised benchmark rates by 25 bps, but cast doubt on future tightening plans. As Scotiabank economists expect the BoE to disappoint markets in the coming months, the pound is at risk of falling to the 1.30 level.
GBP/USD looks headed for a test of the 1.31 zone
“Ultimately, we think the BoE will disappoint even current expectations (~5 more hikes by year-end), so a bull run in sterling on higher confidence in hikes offers another opportunity to sell, anticipating a renewed drop that we expect to retest the 1.30 level.”
“After failing to break convincingly beyond 1.32 on both Thursday and Friday, the GBP now appears to be on course for a test of the 1.31 zone, although this area also provided solid support late last week. A firm drop below the figure would leave GBP more likely to retest 1.30 and extend its strong downtrend since mid to late February.”
Source: Fx Street