GBP/USD: Political risks and BOE outlook – DBS

GBP/USD suffered a double whammy, tumbling by 0.8% to 1.3550 overnight. The market significantly increased bets that the Bank of England would cut the bank rate by 25 bps at the next March meeting. Additionally, GBP’s political risk premium has increased significantly amid a political crisis for Prime Minister Keir Starmer, notes Philip Wee, Senior FX Strategist at DBS.

GBP/USD declines amid political turmoil

"GBP/USD suffered a double whammy, tumbling by 0.8% to 1.3550 overnight."

"First, the market significantly increased bets, from 18.6% to 61%, that the Bank of England would cut the bank rate by 25 bps cut at the next March 19 meeting."

"Second, GBP’s political risk premium has increased significantly."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)