GBP Plunges Amid UK Welfare Reforms and Diverging Monetary Policies

The British Pound (GBP) has been experiencing a decline against the US Dollar (USD), trading below 1.3300 and down by nearly 1.20% over the last two weeks.

This drop is attributed to growing concerns about UK Prime Minister Burnham's welfare reforms and the divergence in monetary policies between the Federal Reserve (Fed) and the Bank of England (BoE).

The Fed is expected to stand pat on interest rates, but markets foresee a one-in-three chance of a quarter-point hike. A surprise rate hike would likely send the US Dollar rallying across the board.

This divergence in monetary policies between the two central banks will continue to put downward pressure on the Pound against the Dollar.