The British pound rose against the US dollar in the ratio of 1.3820.
The drop in demand for the US currency caused the pair to strengthen, but it is unlikely to count on a long-term trend. The difficult situation between the EU and the UK in connection with the Northern Ireland protocol, as well as concerns about the spread of a new strain of coronavirus, continue to restrain the pound. The European Union has rejected the UK's demand to review the deal on the supervision of problematic trade after Brexit with the participation of Northern Ireland. Last week's data showed a slight slowdown in the growth rate of the national economy. As a result, the pound rose to a local maximum since the middle of the month, but in the long term it will decline.
Bank of England member Gertjan Vliege said on Monday that it is advisable to maintain the current monetary stimulus for at least several quarters. He noted that he has not changed his opinion about the temporary nature of inflation, and no tightening will be required in the near future, given the low level of the neutral rate. Vlige predicts a rate cut to -0.5% or even to -0.75% if monetary stimulus is required. The Bank of England will consider further steps to change its monetary policy no earlier than September, taking into account the current data on the state of the economy and the growth of consumer inflation.
The forecast assumes an increase in the Pound/dollar exchange rate to the resistance levels of 1.3840, 1.3860 and 1.3900.