Pound Sterling Rebounds Following Bank of England Rate Cut

The British pound showed signs of recovery on Friday after a significant drop following the Bank of England's (BoE) decision to cut interest rates to 4.5% and revise its growth forecast down to 0.75%. Despite an initial fall of 1.1%, the pound rose by 0.16% to $1.2458 by Friday. Market participants are grappling with the implications of the BoE's forecasts, including a predicted inflation peak of 3.7% for 2023, leading to expectations of further rate cuts this year. Analysts highlight concerns over a stagnating UK economy, with inflation pressures limiting the central bank's ability to act decisively. The BoE's cautious approach has led to volatility in British bond yields and uncertainty in GBP exchange rates, with predictions of multiple rate cuts ahead. Overall, while some recovery has occurred, the pound remains vulnerable to future adjustments in monetary policy.