Lee Hardman from MUFG highlights that the Pound has sold off sharply, with EUR/GBP breaking above its 200-day moving average as markets reprice a more dovish Bank of England path. A closer-than-expected MPC vote, softer guidance, and rising UK political risks around Prime Minister Keir Starmer and potential leadership challenges are seen adding downside pressure to Sterling.
BoE repricing and UK political stress
“The pound has weakened sharply over the last couple of trading days.”
“After closing below support from the 200-day moving average at the start of this week for the first time since April of last year and hitting a low of 0.8613, EUR/GBP jumped to a high yesterday of 0.8721.”
“The abrupt reversal of the pound strengthening trend that had been in place since late last year was triggered both by the dovish repricing of BoE rate cut expectations and the return of political risk in the UK.”
“We are currently forecasting two more cuts this year but can’t rule out a third later this year.”
“The UK rate market has moved to price back in more rate cuts from the BoE after yesterday’s MPC meeting.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Feed from Fxstreet.com