GBP/USD Price Forecast – Calm Before the Storm For Pound
GBP/USD Price Forecast: Calm Before the Storm for Pound
The British pound is currently experiencing a bearish trend. As the UK debt markets are in turmoil and the Bank of England (BoE) is under pressure to boost interest rates, the pound’s prospects are deteriorating. The pound is now down close to 11% against the US dollar this year, and analysts predict the pair could reach parity by November.
GBP/USD has been trading within a narrow range for most of this week, but the market is showing signs that it may be ready to take a turn for the worse in coming days. The currency has slipped below the 2022 lows and is now near $1.0327, which is the lowest it has been since September.
There are still concerns over the economic outlook for the UK, including growth slowing and inflation continuing to rise. Analysts are predicting that the BoE is likely to hike interest rates in October, but this would not be enough to halt the pound’s decline and push it back above parity with the dollar.
A key factor in the pound’s decline is the hawkish bets made by the Fed and other central banks around the world. These bets are helping to keep the USD in demand and pushing the GBP/USD lower, a phenomenon that has been occurring more and more frequently.
Looking ahead, the USD will continue to be supported by hawkish Fed bets and geopolitical woes, while the pound will be under pressure as the BoE raises interest rates and the US economy continues to struggle with recessionary trends.
The pound will also face challenges in the bond market, as supply and inflation are increasing, leaving the UK Gilts vulnerable to weakness. This is despite recent news of an increase in housing prices, which is expected to help boost the economy and support the pound.
Another factor that will be supportive of the pound in 2023 is political stability. Although the new Chancellor, Jeremy Hunt, and Prime Minister, Rishi Sunak, have been in office only a few months, both should be able to navigate the country’s current political storm and provide support for the pound.
The UK Government should be able to put together a budget that is free of scandals and addresses its current account and budget deficits, which will help to build confidence in the pound. If the government is able to do so, it will support investor confidence, which should lead to capital inflows and a recovery in the pound.