GBP/USD and GBP/EUR Analysis: The Hyperbole around British Pound Indicates a Huge Decline, but a Long-term View Says Otherwise

<img src="https://fxopen.com/blog/en/content/images/2023/07/british-pound.jpg" alt="GBP/USD and GBP/EUR Analysis: The Hyperbole around British Pound Indicates a Huge Decline, but a Long-term View Says Otherwise" /><p>The British Pound has been on a remarkable upward trajectory against major peers, including the US Dollar and Euro, since the beginning of the third week of July.</p><p>However, in the days that followed, the Pound&apos;s momentum appeared to be slowing down, leading to the use of sensationalist language from some commentators to describe the market events surrounding the British Pound in the last 24 hours.</p><p>One mainstream news channel in the United Kingdom went so far as to compare the recent decline to the worst downward run since March 2020, a time when the government implemented forced closures of businesses and restrictions on personal movement.</p><p>The reason cited for this temporary slowdown in the Pound&apos;s value is somewhat rudimentary, with reports indicating that the Bank of England may no longer need to raise official borrowing costs from 5% to over 6% to address inflation concerns. While this may have contributed to the recent dip, it is crucial to view the situation in context and consider the bigger picture.</p><p><strong>What events will affect the value going forward?</strong></p><p>Notably, the drop from the high 1.16 range to the current 1.15 against the Euro is only a minor setback, given that it traded at levels between 1.12 and 1.14 against the Euro for much of February, March, and April this year.</p><p>Despite the recent decline against the US Dollar over five consecutive days, the Pound remains in a robust position. At present, the British Pound is still relatively buoyant, with exchange rates at 1.15 against the Euro and 1.29 against the US Dollar.</p><!–kg-card-begin: html–><div>
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</script><!–kg-card-end: html–><p>Looking ahead to the rest of the year can provide a more comprehensive view, free from the immediate impact of interest rate changes or fluctuating economic figures.</p><p>As the British Pound&apos;s value appears to be viewed from two camps, investors and analysts are keeping a close eye on the charts to discern its trajectory. While recent fluctuations may cause momentary concern, the overall sentiment toward the Pound remains positive, with long-term projections indicating a potential upswing.</p><p>Numerous sources, including reputable exchange rate research entities in the UK, have expressed optimism for the Pound&apos;s performance in the long term.</p><p>Some Tier 1 FX interbank dealers have taken a positive stance, forecasting potential rates of 1.35 for the Pound against the US Dollar by the end of 2023 and even 1.40 by the end of 2024.</p><p>Ultimately, the Pound&apos;s performance will be influenced by a myriad of factors, from central bank decisions to economic indicators and global events. As market conditions continue to evolve, cautious optimism remains the key approach in evaluating the Pound&apos;s future performance against its major peers.</p>