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GBP has been relatively weak in the last month as it has fallen since mid-April as BoE rate hike expectations for May were extinguished, explains Greg Gibbs, Analyst at Amplifying Global FX Capital.  

Key Quotes

“The decline was in line with the weaker EUR and broad gains in the USD.”

“In recent days, GBP may have been dragged lower by the weaker EUR related to Italian political risk.   However, it also appears to have been undermined by some homegrown UK political risk related to an internal Tory government Brexit debate.”

“We sense an opportunity to buy the GBP brewing on the basis that domestic inflation pressure is building and is likely to bring BoE rate hikes back on the agenda, and home-grown political risk may fade.”