The GBP/USDcurrency pair has seen a sharp decline today, reaching a level of 1.2456, which represents a decrease of approximately 0.63%. This move is largely attributed to the latest U.S. economic data, which suggests that inflationary pressures remain and the economy may be deliberately slowing down as part of the Federal Reserve’s broader strategy.
The University of Michigan reported an increase in near-term inflation expectations to around 4.5%, which contrasts sharply with the decline in consumer sentiment, which fell to just over sixty-one points on the index.
In the UK, Chancellor Jeremy Hunt has emphasized austerity measures with a focus on reducing debt and achieving an inflation target set jointly by his office and the Bank of England. The target is expected to be around two percent by the end of 2025, according to projections by the Office for Budget Responsibility (OBR). The OBR has also downgraded its GDP growth forecasts since March and now expects growth of only around 0.7%, slightly higher than the 0.6% growth forecast for last year.