The British currency is trading against the US dollar near the level of 1.3740. Last week, the pound resisted, although pessimistic moods are again beginning to prevail in the market. The UK economy is fully open, but there are fears that the situation may change for the worse again.
The volume of retail sales in the UK in June increased by 0.5%, compared with the expected 0.4%. Business activity in the manufacturing and services sectors slowed significantly in July. These data have increased fears of the pace of economic recovery against the background of an increase in morbidity. The pressure on the pound is increasing, and any impulse can lead to a strong fall in the exchange rate of the national currency against the dollar.
The British regulator last week confirmed its position on the temporary nature of inflation. The deputy governor of the Bank of England, Ben Broadbent, said in plain text that an adequate response to the rise in consumer prices may be the absence of any action. The central bank attributes the current strengthening of inflation to an increase in oil prices, which are likely to fall in early 2022. Thus, it can be assumed that the Bank of England will not reduce the volume of the quantitative easing program in the near future. As a result, the chances of a recovery of the pound remain low.
The forecast assumes a decline in the Pound/Dollar exchange rate to the support levels of 1.3720, 1.3700 and 1.3670.