FxWirePro Short Term Outlook: Pound likely to test 1.26 in the near term

Recent strength in the dollar and a comprehensive easing package from the Bank of England (BoE) have been taking their tolls on the pound sterling which has once again dropped below 1.3 against the dollar. The pound has been struggling since the referendum to keep its head above 1.32 area. Any occasional bounce back above is meeting with the greater desire for short positions. Yesterday, The Bank of England’s (BoE) most hawkish member Ian McCafferty indicated that the central bank is yet not done with easing. The rates could be cut further even if it’s kept above the zero mark and the quantitative easing package can be boosted as deemed necessary.

We have already called for the pound to drop below parity against the dollar but as we mentioned that kind of a target will take some time to reach. For the more recent decline, we expect the pound to decline towards 1.26 against the dollar.