The pound fell sharply yesterday after the UK inflation rate jumped from 7% to 9% – its highest level since 1982.
A drop in Covid cases on Tuesday paired with strong distributive trades data saw the pound edge higher, but it lost these gains in the afternoon as market sentiment soured.
As Chancellor Rishi Sunak unveiled the UK’s autumn budget, the pound slipped further. While Sunak announced £150bn in government spending amid a more upbeat economic outlook, concerns that planned tax rises would hit UK households weighed on GBP.
The pound was mixed the following day as markets digested the budget. In addition, the Office for Budget Responsibility said that Brexit would be twice as damaging to UK GDP as the pandemic.
Brexit concerns continued to hobble the pound at the end of the week. Anglo-French tensions bubbled over, with France detaining a British fishing boat. Meanwhile, Northern Ireland protocol negotiations ended without an agreement.
So far this week the pound has fallen, as an absence of data and ongoing Brexit concerns leave Sterling without much support.
The BoE policy meeting on Thursday is the key event for GBP investors this week. City traders are betting on a rate hike, but many economists believe the bank will wait until December to tighten monetary policy.
If markets are disappointed and the BoE doesn’t raise rates, the pound could lose some ground.
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)