The British currency fell sharply in price against the US dollar and reached the support of 1.4000.
Data showed that UK inflation unexpectedly exceeded the Bank of England's 2% target in May. This has raised some concerns that policymakers may start to signal a change in policy thinking if prices continue their upward streak. Inflation has hit 2.1%, and looks set to rise further as the country reopens its economy after a lockdown against the coronavirus.
While the rise in inflation is largely driven by local factors, the Bank of England will be watching closely to see if a stronger currency will help ease price pressures. The British pound is one of the strongest currencies against the dollar this year with a net gain of 3.3%. The yield on two-year UK government bonds rose almost one basis point to a one-month high of 0.11%. British economic data supported the pound, but the key factor was the reaction of the markets to the Fed's comments. As a result, the pound/dollar pair fell to the lowest value since the beginning of May. It is unlikely that the British currency will be able to return to the recent highs around the level of 1.4200 in the near future.
Forex trading. Pound-Dollar GBP/USD forecast for today, June 17, 2021
In our forecast, we assume a further decline in the Pound-Dollar exchange rate to the price values of 1.3980, 1.3960 and 1.3930.