Sterling Experiences Decline Amid Anticipations of BOE Rate Cut Following Economic Data

Recent economic developments have led to a decrease in the value of Sterling, influenced by expectations of a potential rate cut by the Bank of England (BOE). This sentiment has been fueled by the latest October monthly GDP data from the UK, which, when combined with the recent jobs report, suggests a possible adjustment in the BOE’s monetary policy.

Market analysts, prior to today’s activities, were speculating that the BOE might initiate its first rate cut in June of the upcoming year. However, with the opening of European markets and further analysis of recent economic data, there is an anticipation of an adjustment in these expectations. Before today, there was an approximate 12 basis points likelihood of a rate cut as early as March.

The GBP/USD currency pair witnessed a decline after approaching its 61.8 Fibonacci retracement level, a significant technical indicator, at approximately 1.2720. This decline is also attributed to the increasing expectations of a BOE rate cut, a hypothesis supported by recent economic data.

Additionally, the U.S. dollar aspect of the GBP/USD equation is drawing attention, especially with the upcoming Federal Reserve meeting. Current conditions suggest that the currency pair may test key technical levels, specifically the 100-day (marked by a red line) and 200-day (marked by a blue line) moving averages, located around 1.2452 and 1.2494 respectively. These levels are critical to monitor as potential downside thresholds in light of the evolving economic situation.

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