The GBP/USD pair is undergoing a corrective phase.
The British pound sterling has retraced from its three-month peak against the US dollar and is in a declining phase. The current GBP/USD exchange rate is at 1.2643.
Having reached 1.2730 on November 29, the currency pair is now compelled to decline, mainly due to the stabilization of the US dollar.
In spite of this retreat, the pound, when paired with the US dollar, saw a remarkable 4% increase in November, marking its most successful month in 2023. The optimism surrounding the GBP was partially fueled by expectations that, by June, the Bank of England would gather the strength to lower interest rates for the first time in this cycle, in contrast to the broader market outlook for the Fed around mid-spring.
At the same time, monetary policymakers at the Bank of England are maintaining a relatively hawkish stance. For instance, BoE Governor Andrew Bailey mentioned this week that the regulator stands ready to take any necessary actions to bring inflation down to the target level of 2%.