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GBP/USD dips below $1.31 as UK growth forecasts slashed

currency-newsGBP/USD dips below $1.31 as UK growth forecasts slashed
The pound softened on Tuesday after economists forecast the UK economy could flat line later this year due to the war in Ukraine.

Sterling is trading in a mixed range so far this morning, with GBP/EUR dipping to €1.1991 and GBP/USD buoyed at $1.3134.

GBP/CAD is rangebound at C$1.6862, while GBP/AUD and GBP/NZD slip to AU$1.7958 and NZ$1.9216, respectively.

Looking ahead, could we see the euro resume its downtrend today, amidst concerns Russia will ‘double down’ in its invasion of Ukraine.

What’s been happening?

The pound trended lower through yesterday’s session, as economists began to slash their UK growth forecasts.

The CEBR economics consultancy and ING Bank both warned growth is likely to be impacted by the conflict in Ukraine, with CEBR halving its 2022 growth forecast and predicting inflation could soar as high as 8.7% in the coming months.

The euro, meanwhile, managed to snap its six-day losing streak on Tuesday, amidst a technical rebound after the single currency arguably entered oversold territory.

This uptick in EUR exchange rates was also aided by the release of stronger-than-expected industrial productions figures from Germany.

At the same time, the US dollar was left to trade in a narrow range during European trade yesterday as a modest improvement in risk appetite limited demand for the safe-haven currency.

What’s coming up?

As the war in Ukraine continues to dominate headlines we could see recent currency trends resume today.

This is likely to see the euro and pound vulnerable to any negative headlines, particularly amidst fears that Russia’s invasion of Ukraine will continue to intensify.

The only data release of note today will be the publication of the latest US Job Openings and Labour Turnover survey (JOLTs), which could bolster the US dollar later this afternoon on the expectation that job openings will have remained close to 11 million.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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