GBP: Choppy trading as politics cloud outlook – OCBC

💡 DMK Insight

UK inflation remains stubbornly high, and here’s why that matters for traders: Sticky inflation data is keeping the Bank of England (BoE) from adopting a dovish stance, which is crucial for the Pound’s stability. With recent growth figures showing resilience, traders should be cautious about expecting any significant rate cuts in the near term. This environment could lead to a stronger Pound against other currencies, especially if the market starts pricing in a prolonged period of higher rates. Keep an eye on the upcoming inflation reports and GDP figures, as they could provide further clarity on the BoE’s next moves. On the flip side, soft labor numbers could create a narrative that the economy isn’t as robust as it seems, potentially leading to volatility. If inflation starts to ease unexpectedly, it could trigger a rapid shift in market sentiment, impacting not just the Pound but also related assets like UK equities and bonds. The key levels to watch are the Pound’s performance against the USD and EUR, particularly if it breaks above recent highs, signaling bullish momentum.