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Weekly roundup: Pound infused with volatility by mixed data

currency-newsWeekly roundup: Pound infused with volatility by mixed data
The pound traded in a wide range last week, as Bank of England (BoE) rate hike speculation was offset by fears over some underlying weakness in the UK economy.

Sterling initially faltered with the publication of the UK’s latest jobs report, as while this revealed unemployment fell again in November, it also confirmed wage growth continued to slow, raising concerns the country is facing down an impending cost-of-living crisis.

Despite concerns about rapidly rising inflation contributing to this, December’s stronger-than-expected consumer price index was able to bolster GBP exchange rates in mid-week trade as it helped further bolster expectations for multiple rate hikes from the BoE this year.

Reinforcing the upside in the pound was Boris Johnson’s announcement that nearly all remaining Covid restrictions in England would be lifted from this week.

This helped to briefly propel the GBP/EUR exchange rate to a 23-month high on Thursday, before the majority of the week’s gains were reversed at the end of last week.

The sharp slump was triggered by an abysmal UK retail sales print –which stoked concerns the UK economy will have shrunk again at the end of 2021- coupled with fresh political jitters as Tory whips were accused of blackmailing party members into supporting Boris Johnson.

So far this week, the pound is off to a slow start after January’s preliminary PMIs reported growth in the UK’s private sector was weaker-than-expected, with Omicron continuing to sap consumer confidence.

Likely infusing further volatility into GBP exchange rates throughout the week will be UK political uncertainty as Boris Johnson’s future looks to hang in the balance ahead of the publication of internal investigation into the ‘partygate’ scandal.
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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