Skip to Content
News & Analysis at your fingertips.
Free Trading Guides
Please try again

Live Webinar Events


Economic Calendar Events


Notify me about

Live Webinar Events
Economic Calendar Events






More View More
GBP/USD Weekly Forecast: BoE Expects A Recession, Sterling Breakdown

GBP/USD Weekly Forecast: BoE Expects A Recession, Sterling Breakdown


  • Bank of England Projects a UK Recession
  • GBP/USD Retests 1.20
GBP Forecast
GBP Forecast
Recommended by Justin McQueen
Download our fresh Q3 GBP Forecast
Get My Guide

The Bank of England delivered the largest rate hike since 1995, with a 50bps rise in the Bank Rate. However, they also delivered arguably one of the most dovish 50bps hikes in history, thus weighing on the Pound to retest the 1.20 handle against the greenback. The BoE projects the UK to enter a recession in Q3, lasting five quarters with GDP falling to 2.1%. What’s more, the BoE raised their expectations of peak inflation, now seen at 13.3% in October, up from above 11%. As such, the Pound, which has been the poster child of stagflation will continue to face downside risks.

Elsewhere, the BoE also highlighted that based on market implied rates, which see the Bank Rate going to 3%, inflation over the three-year horizon is projected to fall to 0.8%. The lowest projection ever over this horizon, therefore sending a clear message that not only do markets remain far too aggressive on the BoE tightening but also that rate cuts could be coming sooner than expected.

Source: Bank of England

Meanwhile, in the US, stellar Non-Farm Payrolls have partially reduced those recession concerns for now and more importantly, pushed back on the notion that Powell provided a Fed pivot in his recent post-Fed decision press conference. That being said, as we look to next week, the big focus will be on the US CPI report. Should we see another topside surprise, this would likely fuel a break of 1.20 in Cable, while a downside miss puts 1.22 back in focus.


GBP/USD Bearish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 10% 2% 5%
Weekly 26% -14% -2%
What does it mean for price action?
Get My Guide

The Need to Know Complete Guide on Trading the Pound (GBP)

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.