GBP/USD has pulled back from the lowest monthly value, but the British Pound remains under pressure. Weak macroeconomic data turned the multi-month upward trend of quotations. The current correction is the deepest since September 2020, the pair has already lost about 500 points. The near-term outlook implies a further fall in the Pound against the Dollar, as the difference in the expected speed of economic recovery in the UK and the US is too large.
Andy Haldane, chief economist at the Bank of England and a member of the Monetary Policy Committee, said on Thursday that the economic recovery will come very quickly. Excess savings in the UK amount to around 150 billion Pounds, so retail sales will grow rapidly due to pent-up demand. The latest inflation data showed a drop in consumer price growth in February. Probably, in March there will be a very small increase, and only from the second quarter the indicator will grow significantly. The Bank of England has pledged not to cut rates into negative territory, but if inflation remains low, it may resort to this measure in six months. However, the probability of such a scenario is still low.
I assume a decline in the GBP/USD exchange rate to the price value 1.3650.