GBP/USD bounces off 1.30. Economists at Scotiabank expect the cable to drop substantially below 1.30 over the coming months as the Bank of England (BoE) is set to not meet rate hike expectations.

IMF cut the 2023 UK growth outlook

“The rates, economic, and political picture point to losses firming under the figure in the near-term. 

“The IMF noted yesterday in its outlook review that the UK will see the highest rate of inflation this year among G7 countries and it revised its GDP growth projections for the UK by roughly 1ppt in each of 2022 and 2023 amid the cost-of-living crisis.”

“Weak growth and the cost-of-living crisis are likely to keep the BoE from hiking by as much as markets expect this year, which risks GBP losses extending well beyond 1.30 over the next few months.”