Since the middle of this week's trading, the British pound is close to recognizing the losses it incurred last night after Andrew Bailey, Governor of the Bank of England, stated that support for UK pension firms and the long-term gold markets will be withdrawn on Friday. As Bailey said in Washington that the rebalancing that pension funds are doing should take place, “And my message to the funds involved and all the companies involved in managing that money: You have three days left now. You have to get this done."
Sterling fell more than 1% in the hour following the comments. The GBP/USD currency pair fell towards the 1.0923 support level, before settling around the 1.1120 level in early trading today, Thursday.
GBP Volatility to Remain High
The British currency's reaction indicates that markets remain nervous about the UK's financial position and expectations that the bank will extend the plan beyond Friday have been high, particularly given that some pension companies have been told they need more time. But later media reports suggest that this is indeed the case, with the Financial Times saying the bank has privately signaled to bankers that it may extend its emergency bond purchase program beyond the Friday deadline. The article has been widely cited by financial professionals and could be behind the stability of UK bond markets. Sterling is tracking bond market pressures and returning higher in response to the stability observed in bond markets, suggesting that the overnight moves were an indirect reaction.
All in all, volatility in the British currency is expected to remain high.
Commenting on the performance, George Vessey, FX analyst at Western Union Business Solutions said, “The British pound continues to swing wildly on a daily basis against many of its peers as the Bank of England (BoE) seeks to calm turmoil in the UK gold markets, which is leading In turn, this will cause chaos in the mortgage and pension markets as well as currency markets, and he adds: “The short-term outlook remains highly uncertain for the pound, and since markets hate uncertainty, the path of least resistance for the pound is likely to be the least unless it appears More clarity from the BoE speakers today.
Sterling dollar forecast today:
- The recent rebound of the GBP/USD currency pair has not yet amounted to a change in the general trend, which is still bearish.
- The return of stability below the 1.1000 level gives the bears the impetus to move down strongly again.
- The gains of the sterling dollar are still vulnerable to collapse, as the factors of the US dollar’s gains are still stronger and continuing.
- The pound is facing a state of uncertainty and pessimistic sentiment for investors in global markets.
The closest targets for the bulls are 1.1120 and 1.1200, respectively. The currency pair will be affected today by the release of US inflation figures and any signals from the Bank of England.
Ready to trade our daily Forex forecast? Here’s a list of some of the best Forex trading platforms to check out.
