GBP/USD plummets below 1.5860

$GBP/USD broke below 1.5860/70, accelerated the decline and printed a fresh low at 1.5810. During the last two hours the pair dropped more than a hundred pips after the release of the Bank of England Quarterly Inflation report that weakened the pound across the board. 

The central bank cut growth and inflation forecast. According to RBS FX Strategists, the report reinforces current market expectations. “Overall, the key policy signal is still found in the CPI forecast across the 2-3 year forecast, and this comes about as close as it could to validating current market rate pricing. The RBS forecast remains for the first 25bp hike to come in August 2015.”

$GBP/USD approaches last week lows 

Cable failed to hold above 1.5900 against the US dollar and then reversed sharply to the downside, erasing yesterday’s gains in a few minutes. The decline brought the price closer to last week low at 1.5789; if it falls below it would be trading at the lowest level since September 2013.