GBPUSD Analysis – December-21-2023

by InkWell December 21, 2023 · GBPUSD Analysis / Forex Market Analysis

The value of the GBPUSD fell more than half a percent, going under $1.27. This happened because people expect lower interest rates soon. A recent report showed UK inflation slowing down to 3.8%, the smallest since September 2021 and less than the 4.4% predicted.

Also, the main inflation rate dropped primarily to 5.1%, the lowest since January 2022 and under the expected 5.6%. As a result, investors are betting on the Bank of England cutting interest rates next year. They think there will be a total cut of 143 basis points. This means they fully expect five quarter-point cuts each, with a 70% chance of a sixth cut. However, BOE Governor Andrew Bailey keeps saying he wants to keep rates high for longer. Inflation is still nearly twice the BOE’s goal of 2% and the highest in the Group of Seven countries.