GBP/USD to plummet toward the 1.30 mark as BoE is set to disappoint markets – Scotiabank

The Bank of England (BoE) hiked key rates by 25 bps but showed hesitance in its future tightening plans. As economists at Scotiabank expect the “Old Lady” to disappoint markets in the coming months, cable is at risk of falling to the 1.30 level.

GBP/USD seems on track for a test of the 1.31 zone

“We ultimately think the BoE will disappoint even current expectations (~5 more hikes by year-end) so a push higher in the GBP on increased hikes confidence offers another opportunity to sell, anticipating a renewed decline that we expect to re-test the 1.30 mark.”

“Following a failure to convincingly break past 1.32 on both of Thursday and Friday, the GBP now seems on track for a test of the 1.31 zone – although this area also provided solid support late last week. A firm drop below the figure would leave the GBP more likely to re-test 1.30 and extend its sharp downtrend since mid/late-Feb.”