In the United Kingdom, political pressures are rising while monetary challenges are exacerbated. Economists at Westpac note that the GBP/USD pair could tumble to test the 1.120 level.

UK’s political backdrop remains precarious 

“UK is facing extreme monetary policy challenges with inflation at the top of major economy rankings while growth forecasts from bodies such as OECD are at the bottom of those major economies.”

“PM Johnson will return to the UK from a series of key overseas summits (Commonwealth, G7, NATO) to yet further pressure on his leadership from a disgruntled Conservative Party. UK is also brandishing a bill on the N.I. Protocol which is divisive with EU and Scotland’s First Minister Sturgeon has started an equally divisive plan for an independence referendum in Oct. 2023. Unions plan further strikes through the summer and Govt. approval is at its lowest since the Brexit Agreement was finally reached.”

“GBP/USD rebounds have been limited and it remains vulnerable to flushing below 1.20.”