During the last few months, the British Pound has seen some very big movements. Previously, the pound was trading near parity against the dollar. However, a series of political and economic events have caused big movements in the currency. The GBP/USD exchange rate has gone from being at the lowest level since September to being above $1.20. The pair has also gained over 14% since the nadir on September 26.
One of the most important factors that affect the GBP/USD exchange rate is the US economy. The Federal Reserve has been raising interest rates, which has led to a rise in the value of the Dollar. This has been driven by a combination of hawkish Fed bets and safe haven flows. However, the recent weakness of the US dollar is giving a secondary push to the Cable. This could lead to another leg higher in GBPUSD.
A few weeks ago, the pound saw a huge drop in value after reports emerged of British government plans to hike taxes and cut spending. The FT reported that the UK government would hike taxes and cut spending by GBP50bn. This was followed by a report from the OBR, which indicated that the UK was in recession. The economy is expected to shrink by 1.8% in March and by 1.4% in the next year. The government also plans to increase the amount of bonds that it plans to sell this year. The pound could be pushed lower if global investors lose confidence in the British government.
It’s also important to note that the pound has been under pressure since the government announced the decision to leave the European Union. It’s been very volatile in recent months as uncertainty surrounding the UK’s exit from the EU has led to fears about a global recession.
In the United Kingdom, the economy is forecast to shrink by 1.8% in March, according to the Office for Budget Responsibility. This will be followed by a drop in inflation in the next month. In the long run, the UK economy is expected to shrink by 1.4%, according to analysts. It’s also important to note that the government’s spending plans are expected to be cut further. The British government would have to find a way to get its public finances back on track.
The pound has seen a lot of volatility over the last two months, and it’s possible that we may see a run on the pound. However, the GBP/USD exchange rate is also under a variety of influences this week, and it’s important to know what’s going on in the markets.
During the last week, the British pound traded in a range between horizontal support and resistance levels. Earlier this week, the pair broke through the resistance at 1.1355, but it later retreated to support near 1.1220. The British pound is currently trading between horizontal support and resistance levels, and it’s unclear whether the pair will continue to move this way.