GBP/USD Keeps Testing New Lows

The GBP/USD currency pair is persistently exploring fresh lows, with the British pound sterling facing its weakest position in seven weeks. The current exchange rate for GBP/USD is resting at 1.2560.

The market is currently in the process of reevaluating its stance on the prospective actions of the Bank of England. Notably, dismal PMI statistics have unveiled the vulnerability of the country's economy to further tightening of monetary policies.

It is increasingly plausible that the BoE may not need to implement interest rate hikes to the extent initially envisioned in order to rein in inflation to target levels. The deceleration in product price hikes, presently at its slowest pace since 2021, is naturally constraining inflation.

Since December 2021 until today, the Central Bank has raised interest rates on 14 separate occasions, propelling the rate to its current level of 5.25 percent per annum, marking the highest point in the last 15 years.

Next month, the rate is scheduled to ascend to 5.50 percent. Nevertheless, the probability of it climbing further to 6.00 percent is dwindling rapidly.

Consequently, the Bank of England finds itself on the cusp of concluding its aggressive interest rate hiking cycle, thereby exerting downward pressure on the pound.

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