GBP: lows are too close. Overview for 11.05.2022

11.05.2022

GBPUSD remains under bearish pressure; the Brexit issue doesn’t make things more optimistic.

The Pound sterling remains weak against the USD. The current quote for the instrument is 1.2374.

Today’s slight optimism shouldn’t mislead anybody: lows in GBP are too close. On Monday 9 May, the asset updated the bottom at 1.2259, the lowest level since 30 June 2020.

According to the FT article published today, the Bank of England should tighten its monetary policy and raise the rate to 2.5%. this is the opinion of the National Institute of Economic and Social Research. To take control of the growing inflation, the regulator should keep the rate at the value mentioned above for several years. 

At the same time, the National Institute of Economic and Social Research believes that the CPI might weaken faster than the Bank of England assumes, but only provided that the British regulator will act quickly. It might be difficult for the BoE – it will have to “swim” between lowering inflation expectations and trying to avoid an economic slump. 

The Pound enthusiasts are also very nervous with the Brexit issue again, involving the Northern Ireland protocol. The decision hasn’t been made yet, and the situation remains very complicated. The lack of decisions might become a problem for the European Union’s domestic market because it interferes with clear trading rules and regulations. 

Much time has passed since the official Brexit date but the key aspects and issues still haven’t been solved. It’s a serious problem for the Pound. 

Attention!

Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.