The British pound has been on a losing streak, with its fourth consecutive weekly loss against the US dollar and the euro. The currency, which had been trading at one-year and two-year highs in July, has fallen due to the Bank of England’s decision to cut interest rates for the first time in four years. Investors are speculating that there could be more rate cuts in store this year, which could further weaken the pound.
Laith Khalaf, head of investment analysis at AJ Bell, warned that inflationary pressures are still a concern, despite the recent interest rate cut. He pointed out that factors such as a potential rise in energy prices and public sector pay agreements could push up prices.
Kyle Chapman, FX markets analyst at Ballinger Group, highlighted that the pound’s direction is dependent on factors such as the US economy and potential rate cuts by the Federal Reserve. He noted that a soft landing in the US economy could see the pound appreciate, while fears around a recession could lead to further declines.
Overall, the outlook for the British pound remains uncertain, with potential future rate cuts and inflationary pressures looming. Investors are advised to monitor developments in the global economy and central bank policies to gauge the future direction of the currency.
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