Pound Sterling (GBP) is under strain as the Bank of England (BoE) raises interest rates.
The Pound Sterling (GBP) is under strain as the Bank of England (BoE) raises interest rates, putting pressure on the UK property sector, hiring trend, and industry operations. The GBPUSD pair is under pressure as BoE policymakers keep the door open for future policy tightening in order to return inflation to 2%.
The Bank of England’s Pill appears confident that inflation in the United Kingdom will fall to 5% this year and reach the target rate in the first half of 2025. On the verge of hitting 2% Inflation could cause the British economy to enter a slump. Going forward, the second quarter Gross Domestic Product (GDP) numbers will be in the limelight.
The pound is under pressure from the market’s cautious mood.
Pound Sterling faces selling pressure as it attempts to break through its two-day high near 1.2780. As worries of a UK recession grow amid predictions of more interest-rate hikes from the Bank of England.
According to a study conducted by the Recruitment & Employment Confederation (REC) and KPMG. UK employers delayed permanent staff hiring last month by the most since mid-2020, according to Reuters.
Last week, the Bank of England raised interest rates by 25 basis points (bps) to 5.25%. Leaving the door open for further policy tightening.
And now, according to BoE senior economist Huw Pill, many more interest rate hikes are on the way.
Technical Analysis
As investors await important inflation data this week, the pound sterling shows a volatility decrease around 1.2750. On the daily chart, the Cable fails to return above the Rising Channel chart pattern. This could send the asset on a longer-term downward trend. The asset is having difficulty staying above the 50-day Exponential Moving Average (EMA).
