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Feb 28 - 11:55 AM

GBP/USD - COMMENT-Sterling Slides Away From 1.27 As Dovish Global Rate Tones Rise

By Paul Spirgel  —  Feb 28 - 10:10 AM

Sterling fell away from recent trend highs near 1.27, sliding 0.32% to 1.2641 after below-forecast Aussie CPI and a dovish RBNZ hold weighed on major currencies versus the dollar, though the UK's G7-leading inflation rate is likely to keep the pound well supported.

Despite the drop, the pound remains entrenched in its recent 1.2710-1.2518 range, and with little guidance or data with regard to inflation or growth the pound is likely to remain there.

The recent split BoE rate vote, which came in at six to hold, two to hike and one to cut underscores the dilemma for sterling traders in betting when, and to what degree, the BoE may pivot to lower rates.

Though UK inflation, particularly core, remains hot at 5.1%, the lack of progress to ward the BoE's 2% target should keep it on a high-for-longer tack.

For the pound to break out of its recent malaise, the hike or cut tails need to gain traction.

The well-above target UK inflation needs to show a clearer indication of moving toward target before 2024 highs near 1.28 can be breached.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary

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