GBP/USD below 1.6850 as Retreat Continues

The British pound’s powerful rally over the past year seems to have come to an abrupt end and Capital Economics told CNBC the currency faces a further drubbing this year.

The pound rallied 15 percent to a high of $1.7191 in early July from July 2013, on expectations that U.K. central bankers were poised to hike rates for the first time since 2007. However, it has fallen around 2 percent over the past month to trade at $1.6855 in early Asian trade on Thursday.

According to economists at Capital Economics, the recent declines have been motivated by shifting rate hike expectations for both the U.K. and the U.S.  “Investors still seem to be expecting interest rates to rise more quickly in the U.K. than in the U.S.,” said Capital Economics in a note published Wednesday.


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