GBP/USD to sink towards 1.2850 in absence of certainties from conflict in Ukraine – Westpac

Uncertainty from the invasion of Ukraine will limit the Bank of England (BoE) hiking path despite potential for embedded inflation. Economists at Westpac note that the GBP/USD pair is at risk of suffering a sharp decline to the 1.2850 region.

Cost of living concerns to contain rate rises and GBP rebounds

“BoE had cited the cost of living pressures as a reason for a more gradual tightening path, but they will also be unable to ignore surging inflation. The net outcome is likely to be a lower and slower path of withdrawing accommodation.”

“GBP/USD broke perceived support to test 1.3100 and remains at risk of declines towards the 1.2850 area unless uncertainties from the conflict in Ukraine subside and GBP/USD can regain levels above 1.33.”