GBPUSD Analysis: December 22, 2023

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GBPUSD Analysis – The British pound rose past $1.27 following investor analysis of new data and future monetary policies. Recent reports indicate the British economy shrank in Q3, with even gloomier revisions for Q2, hinting at a potential recession.

On a brighter note, retail sales in November were stronger than expected. Inflation in the UK slowed down to 3.8%, less than the forecasted 4.4%, and core inflation fell to 5.1%, also below predictions. Traders are now heavily speculating on Bank of England rate cuts next year, expecting a total drop of 143 basis points. This suggests anticipation of five quarter-point cuts, and a 70% likelihood of a sixth. However, BOE Governor Andrew Bailey has been advocating for keeping rates high for longer. UK inflation remains nearly double the BOE’s 2% goal, the highest among the Group of Seven.

GBPUSD Analysis

GBPUSD Analysis – 4H Chart

Source Reuters.