Pound bounces back following today’s rate cut

The FX market is having a re-think on the Bank of England rate cut reaction. After falling in the lead-up to the announcement and the immediate aftermath, it found a bottom near 1.2360 and has climbed 80 pips.

Some of that is broader US dollar weakness as trade tensions diminish but it’s also an impressive show of resilience for the pound. There are some deep worries about slowing growth at the moment but Trump has highlighted that he’s not looking for a trade fight with the UK. The could mean we’re near the point of maximum pessimism on the UK economy, though I don’t rule out more domestic political angst.

Technically, the drop today didn’t come close to the recent lows and the weekly chart is showing increasing confidence of a double bottom at 1.21.