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Weekly Roundup: Pound dented by BoE recession warning

currency-newsWeekly Roundup: Pound dented by BoE recession warning
The pound initially strengthened last week as markets increasingly priced in a 50-bp rate rise from the Bank of England.

However, GBP exchange rates began to slip as the week went on. Political instability hurt Sterling, with the ongoing Tory leadership contest creating uncertainty. In addition, the UK’s final services PMI printed below initial estimates, revealing a larger-than-anticipated slowdown.

On Thursday, the BoE hiked rates by half a percent but also forecast a UK recession lasting from the end of 2022 through 2023. Sterling slumped but then bounced back, having seemingly entered oversold conditions.

The headwinds persisted into Friday. With GBP investors still mulling the BoE’s recession warning, Sterling slipped lower.

So far this week, the pound has wavered. Although European markets seem upbeat, the UK’s political and economic woes are weighing on GBP.

Investors will be anxiously awaiting the UK’s GDP data at the end of the week. Economists are forecasting a 0.2% contraction in the second quarter, which could see Sterling slump.

Until then, domestic political and economic news could drive most movement in the pound amid a lack of notable UK data.
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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