GBP weekly forecast

The Pound showed no clear trend throughout Monday's session due to the absence of new economic data from the UK. Consequently, the risk-sensitive Pound remained largely exposed to global risk dynamics, with fluctuating market sentiment providing little support for GBP.

On Tuesday, Sterling weakened against most of its rivals due to the continued absence of British economic data. With no significant releases, markets turned their focus to the upcoming UK inflation data and the subsequent Bank of England interest rate decision. Investors showed caution, avoiding aggressive bets on Sterling, causing GBP to remain mostly flat throughout the session.

On Wednesday, the eagerly awaited UK inflation data revealed that the latest consumer price index fell to the central bank’s 2% target rate in May, strengthening market expectations that the BoE will reduce interest rates in the summer. However, higher-than-expected services inflation provided some support for GBP, indicating that domestic price pressures remain elevated.

On Thursday, the Bank of England implemented a widely expected hold on interest rates. However, GBP encountered difficulties as markets interpreted the central bank's forward guidance as predominantly dovish, suggesting a potential rate cut in August.

On Friday, mixed UK data led to GBP trading within a wide range against its peers. Although UK retail sales rebounded more than expected in May, a worse-than-anticipated preliminary services PMI limited GBP’s potential gains.

This week, the absence of data releases for Sterling could leave the currency vulnerable to the movements of other currencies. The only significant release is the UK's finalized GDP data for the first quarter of 2024, scheduled for Friday, which could introduce volatility to GBP at the week's end.

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