Pound at odds with ongoing UK issues
Monday 27 September, 2021
Daily Currency Update
GBP - British Pound
It is hard to miss the headlines at the moment with ongoing issues in the UK around fuel shortages. Having queued for 90 minutes on Saturday to top up my tank of petrol from half to full it is certainly easy to see how consumer economics works. To add to the issues around fuel shortages, the UK furlough scheme ends soon and there is set to be more changes to the universal credit system. Despite this though, and as our own headline suggests, the pound is currently trading at odds with these news stories. This is particularly so, against the US dollar and euro and is a result of the slightly more hawkish tilt that we saw from the Bank of England last week.
It is set to be a quiet week compared to last week, although Andrew Bailey the Governor of the Bank of England is speaking later, so the pound which is particularly sensitive to risk at the moment, could certainly be reactive to anymore headlines.
Key MoversIn Europe and the US, politics is the theme of the week. At the weekend we had the German elections with the Social Democrats edging proceedings with 25.7% of the vote and this week the US debt ceiling issue will be raising its head once again. This issue alongside the ongoing concerns over Evergrande and its debt obligations means that the US dollar could remain well bid and strong throughout the week. Whilst the risk-off sentiment isn't as high as it was last week, concerns are still elevated. It is also the end of the month this week, which can often mean the US dollar benefits from end of month flows.
- GBP/EUR: 1.1620 - 1.1730 ▲
- GBP/AUD: 1.8750 - 1.8880 ▲
- EUR/USD: 1.1680 - 1.1750 ▼