The GBP/USD pair is rapidly dropping ahead of the Bank of England meeting.
The British pound sterling, in tandem with the US dollar, is steadily losing ground. The current GBP/USD exchange rate is holding at 1.2316.
The pound is facing considerable pressure as the US dollar strengthens its position. On top of this, more stress is on the horizon.
Today hosts the Bank of England meeting, and the market is on edge. It's highly probable that the interest rate will climb to 5.50% per annum, up from the prior 5.25%. Investors are eagerly awaiting commentary, contemplating whether the BoE is ready for further borrowing cost hikes or will pause here. Opinions are also rife on how the BoE will manage these elevated base prices.
At the same time, minutes from the preceding Bank of England meeting will be released. However, the market is unlikely to focus much on them, given the anticipation of new data.
Until now, the Bank of England had little trouble taming inflation. Prices might fluctuate, but they swiftly stabilized due to active domestic processes. With Brexit, the pandemic, and other complications, many natural and well-established dynamics have been disrupted. The old approach is no longer effective, and a new one is yet to be determined.
Amidst all this, the pound is experiencing significant pressure.