Bearish Outlook For Gbp

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Bearish Outlook For Gbp

Bearish 2026 Outlook For Pound Sterling (Gbp)

The situation looks very gloomy for the Pound Sterling (GBP) in the year 2026. From slow growth to 2% inflation to a weak labor market, all of these things will put negative pressure on the GBP.

According to the analysts, the inflation in the UK has reached a peak and will reach 2% by Q2 2026. In addition, the economic growth will remain slow while the labor market will also ease further in 2026.

Bank Of England To Cut Rates Aggressively In 2026

All of these things tell us that the Bank of England will have to cut rates aggressively in 2026. Normally, lower rates aren't good for the GBP, and that's exactly what is likely to happen in 2026.

In 2026, the GBP will be facing threats from multiple directions. However, another fact of the market is that it rarely does what the general public thinks it would do. So, that's the only thing that can offer some relief to the GBP bulls.

quick look at inflation shows that it is near 3.6% for now, but it will eventually move lower to 2% by Q2 2026. The food prices have also reached a high point, and there's no room for any more upside.

Last but not least, new business investments in the UK will also decline during H1 2026. Why? The confidence has hit a new low due to the tax increases by the UK government.

The bottom line is that there are very few positive developments for GBP in 2026. With a dovish BoE, slow growth, and an easing labor market, there's little reason for GBP to stay at a high level.

That's why analysts think that GBP will lose its value against all the major currencies. However, it will be interesting to see how it behaves against the US Dollar as the US Federal Reserve is also expected to deliver numerous rate cuts in 2026.

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