The Bank of England meeting yesterday did not bring out any new factors. At 0.5%, the base rate did not change.
Hence, the GBPUSD was mostly steady throughout the last 48 hours, finding technical support at 1.3500 generally, with occasional excursions below this level.
Will we see a rebound from here? One thing worth noting that is the recent fall in UK inflation, a reason behind BoE’s no-change decision, will reverse if Sterling depreciates further from here. BoE will be forced to raise rates if this happens. For now, the FX rates have not dropped enough to see a huge pickup in inflation. In fact, we could be in a ‘sweet spot’ where inflation, FX rates, and interest rate are in ‘equilibrium’, ie, not to hot or cold.
Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.