The pound sterling had risen in prestige a few days ago. This pair spurred by the windsor agreement reached between britain and the European Union. 

However, the exchange rate immediately weakened again in a short period of time due to dovish statements from the boss of the British central bank (BoE). 

This week's GBP/USD rally efforts were sold out at the end of Thursday's New York session (2/March). BoE Governor Andrew Bailey said something at the Cost of Living Conference held by the Brunwswick Group yesterday.

He would be careful not to suggest that his parties are done raising bank rates, nor that they definitely need to do more in raising interest rates. 

Economy is Developing as Expected 

Bailey explained that the economy is developing as expected. It comes together with the pace of inflation weakening slightly and salary growth strengthening slightly. 

In line with that, he wants to look at the next economic data before making new policy decisions. Future data will add to the overall picture of the economy and the outlook for inflation.

Furthermore, it will be a reference to their policy decisions as Bailey said. Bailey's remarks signaled his hesitation to continue the BoE's monetary tightening cycle. 

In fact, the BoE needs to raise interest rates by 25 basis points by 3 more times to reach the highest interest rate at 4.75% which market participants have been calculating since long ago. 

Bailey’s Speech are Disappointing for Many People

The gap between market expectations and the consequent implications of Bailey's speech sparked disappointment for many. As a result, the market again bought UK equities and released sterling. 

It was a brave man who put a lot of faith in Andrew Bailey's comments about UK interest rates. It is as Bailey often changed his outlook so far.

However, his view that interest rates may not need to rise steadily has placed the FTSE 100 above other global indices. It was while the pound fell back against the dollar and fell more dramatically against the euro.

The statement above was said by Chris Beauchamp, a chief market analyst at IG. The GBP/USD duo will next face the "challenge" of the release of US Non-manufacturing PMI data on Friday night. 

Inflation is High, but It is Not that Scary 

In addition, the release of other Ubites Kingdom economic data could continue to fuel turmoil in sterling. It is especially until the next BoE meeting on March 23.

Elsewhere, Eurozone inflation data allows the ECB to continue its planned rate hike. However, the data aborted speculation of some market participants who expected higher terminal interest peaks. 

Inflation is obviously higher than expected, but it may not be as bad as feared, given that expectations have shifted following national data in recent days. It was said by Ben Laidler, a Global Market Strategist at eToro London.

He think the basic scenario is for the ECB to continue the pace of rate hikes. That is by a magnitude of 50 basis points, which actually remains quite hawkish.

US and Eurozone Macro Condition Gap is Highlighted 

A number of other analysts continue to highlight the gap between the macro conditions of the Eurozone and the United States. It is as one of the main factors affecting EUR/USD going forward.

The latest data from the Eurozone and the United States have recently shown inflation rates exceeding expectations. So, the next important question is which regions are experiencing faster disinflation. 

People know that the euro/dollar is well below its one-year interest rate swap. If Eurozone inflation does not start to fall and US consumer inflation continues signs of disinflation, the euro could rally very sharply. It was said by Simon Harvey, a Head of FX Strategy at Monex Europe. Many analysts are agree with that opinion too.