GBP Forecasts Slashed on UK Fiscal Woes and Inflation

Major institutions, led by Bank of America, have sharply downgraded GBP forecasts amid rising concerns over UK fiscal policy and persistent inflation. GBP forecasts have been cut after analysts flagged stagnant economic growth, record-high consumer prices and doubts over the government’s ability to manage rising public debt. Key factors driving the sell-off include stubborn inflation eroding real wages, weak post-pandemic recovery, and ongoing fiscal uncertainty. Market participants are closely watching UK GDP revisions, the government’s budget deficit trajectory and the debt-to-GDP ratio. Interest rate expectations also play a pivotal role: while the Bank of England has raised rates to curb inflation, traders question whether further hikes could tip the economy into recession. For forex traders, heightened currency volatility calls for robust risk management. Diversifying portfolios, using hedging instruments and monitoring BoE announcements are crucial steps. Although a weaker pound can sometimes fuel interest in alternative assets including cryptocurrencies, global risk aversion may offset any crypto upside. Staying informed on UK economic data and central bank signals remains essential for navigating this turbulent market.