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Bank of England and the Rate Hike Dilemma
BoE governor Mark Carney turned mildly-dovish a couple of weeks ago, pulling the rug under the feet of a strong GBP complex. With the first look at UK Q1 GDP showing growth at a miserly 0.1%, and with inflation falling slightly faster than expected, the UK central bank may have to delay the start of policy normalisation for longer than expected. This realisation has hit GBP hard against a wide range of currencies, especially against a resurgent USD, where interest rate hikes are already ongoing with more expected later this year. One beneficiary of a weaker GBPUSD is the FTSE 100 which is back within reach of its recent all-time high.
IG Client Sentiment data show traders remain long of GBPUSD but positioning has changed over the last week. Download our free guide to see how sentiment shifts can help you make more informed trading decisions.
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--- Written by Nick Cawley, Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.