Economic concerns push pound lower
Monday 22 August, 2022
Daily Currency UpdateThe pound had a very poor finish to last week. GBPUSD was down over 3%, trading into the $1.17s on Friday, where the market is still trading today. GBPEUR was also down 1.5%, trading from the €1.19s and finishing the week in the mid €1.17s. There were a number of factors that contributed to the falling pound last week, including the ever increasing inflation rate, retail sales figures and wage growth.
The UK will also get a glimpse at its PMI surveys for August on Tuesday. It has been a tough year for sterling so far, which is even underperforming against the euro despite the Bank of England raising interest rates at every meeting.
Key MoversUS Federal Reserve officials are part of the reason for the recent US dollar strength. On Friday, Richmond’s Fed, Thomas Barkin, said there’s a lot of time to decide on the size of the September meeting interest rate hike, adding that the Fed needs to move to tighter policy. Fed officials will head to Jackson Hole for their annual symposium this week, that could spell trouble for risk assets but potentially more good news for the US dollar due to it being a safe haven currency.
The past few weeks have been dreadful for the European economy, with the energy shortages pushing natural gas prices on the continent to new records, while an intensifying drought in Germany dried up rivers and made it harder to transport supplies. EURUSD remains under pressure trading extremely close to $1.00.
- GBP/USD: 1.1780 - 1.19 ▼
- GBP/EUR: 1.1745 - 1.1870 ▼
- GBP/AUD: 1.7060 - 1.7205 ▼
- EUR/USD: 0.9950 - 1.0100 ▼