Cost of living concerns hamper rate rises and GBP rebounds. In the view of economists at Westpac, the cable is at risk of falling towards December 2021 lows around 1.3175/65.

GBP held hostage as current inflation shock exacerbates UK’s cost-of-living crunch 

“The BoE has already cited the cost of living impact as a reason for its gradual tightening path. Debate within the MPC is likely to increase as fighting inflation with higher rates is likely to increase the cost-of-living burden on households and businesses.” 

“GBP/USD is threatening to break support within its lowered perceived 1.33-1.35 range and risk a retest of Dec 2021 lows between 1.3165-1.3175.”