#密码资产动态追踪 GBP suddenly gains strength? Beware, this might be an illusion

Recently, many have been chasing the rally of GBP against the euro, and the outlook seems bright. But have you really considered the risks behind it? Francesco Pesole, an analyst at ING, recently offered a sobering assessment: the Bank of England is very likely to cut interest rates earlier than expected, and this current GBP rally is mostly a false fire.

Why is he so sure? The key lies in the timing of the rate cut. According to Pesole’s analysis, the Bank of England could cut rates again as early as March—more aggressive than current market expectations. If that happens, the GBP/EUR exchange rate will likely experience a one-sided decline. Investors who have bought in now could become the bagholders when the correction hits.

The data is clear: the market has not fully priced in the expectation of at least one rate cut before June. It sounds complicated, but simply put— the market is severely underestimating the possibility of a rate cut. Once the Bank of England acts, what will happen to the exchange rate? A sharp correction is inevitable. Pesole specifically pointed out that EUR/GBP has already fallen below the key level of 0.87, which, according to his model, indicates a short-term oversold condition. The rebound potential is limited, but the downside risks are building.

The current situation is quite ironic: on one hand, the strength of the pound is attracting attention, while on the other hand, the central bank’s rate cut threat looms large. Smart institutions have already started reducing their positions, while retail investors are still chasing the high. The old story remains—the moment everyone believes the central bank is rock solid, a 180-degree policy shift can often crush the market.

Getting to the core: Is UK inflation really under control? Can the economy sustain such high interest rates? If the answer is No, then every point the pound gains now is just building up the potential for a subsequent decline.

What do you think? Let me know in the comments below—

Do you think the Bank of England will cut rates early in March?

If you are a trader, should you go long or short now?