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Home / Analytics / Forex analysis & forecasts / Forex Fundamental analysis / The Pound updated its “bottom”. Overview for 05.07.2016
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The Pound updated its “bottom”. Overview for 05.07.2016

The GBP/USD pair weakened sharply after the report on the United Kingdom’s financial stability had appeared.

On Tuesday, the British Pound weakened sharply and reached the lowest point over the previous 31 years. The current quote for the GBP/USD pair is 1.3085; the daily decline is 1.5%.

So, this afternoon, the Bank of England published another report on the country’s financial stability. The report says that there might be risks of capital inflow reduction because of the results of the referendum held in June. In its turn, it might cause a long-term downward pressure on the Pound.

The tone of the report was the same as the one of some economists, who think that the Pound is under downwards pressure and it would be difficult to avoid it. The British assets already shrank and will continue getting cheaper – investors are not ready to invest money into projects without promising future.

Also, today the BoE made a decision to reduce the countercyclical capital buffer from 0.5% to 0%. This tool is intended for retarding bank activities when the economy is on the rise, and stimulating it when it is on the fall. In fact, the BoE made the initial step on the road to credit-and-monetary conditions easing in the country. It will help to expand the credit rating of the British banks by 150 billion Pounds on the average.

It is thought that the pressure on the Pound will remain significant so far.
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