The GBP/USD currency pair took a sharp dive today, reaching a level of 1.2456, which represents about a 0.63% decrease. This movement is largely attributed to recent U.S. economic data suggesting that inflationary pressures remain and the economy may be deliberately slowing down as part of the Federal Reserve's broader strategy.
The University of Michigan reported an increase in near-term inflation expectations to approximately 4.5%, which stands in stark contrast to the lower consumer sentiment that was recorded at just above sixty-one points on the index.
In the UK, Chancellor Jeremy Hunt has highlighted austerity measures with a focus on reducing debt and achieving an inflation target collaboratively set by his office and the Bank of England. The target is expected to be around two percent by the end of 2025 according to projections by the Office for Budget Responsibility (OBR). The OBR has also revised its GDP growth forecasts downward since March, now anticipating only around a 0.7% growth, which is slightly higher than the 0.6% growth projected for last year.
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