GBP’s recovery from Covid peaked at 1.4212 in May 2021. In November, the Bank of England’s shock decision to refrain from the rate hike it flagged sent the cable to the year’s low of 1.32. In 2022, economists at DBS bank expect the GBP/USD pair to trade in a lower 1.28-1.33 range.

GBP caught between BoE hikes and Brexit/political risks

“In 2022, BoE rate hike expectations are likely to be offset by calls for earlier Fed hikes and Brexit risks.”

“Worries persist that the British government might trigger Article 16 and set off a trade war with the EU. The Guardian newspaper noted that Tory MPs could turn on Prime Minister Boris Johnson if his falling approval rating slips below the Conservative Party.”  

“GBP to trade in a lower 1.28-1.33 range into 2022.”