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GBP under pressure amid UK energy crisis

Daily Currency Update

GBP - British Pound

The pound found itself under pressure as Europe’s worsening energy crisis is starting to impact the British economy.

Sterling was down against most major currencies over the last few trading days, although it has shown small signs of a recovery this morning.

Energy prices have risen by 24% since August last year, with European gas prices rising at a particularly rapid rate, and this is starting to have a significant impact on UK businesses. Five small energy suppliers have already gone bust over the last five weeks and another four are expected to fold by the end of September, with an estimated 1.5 million customers being affected.

This worsening outlook for the UK’s economy has sent the pound to a near one-month low against the US dollar.

Key Movers

The euro was one of the best performing currencies on Monday, although the German election this Sunday could bring volatility to the market. With many speculating about a shift further left, the implications could be significant for the Eurozone economy given that Germany has been the main growth engine for more than a decade.

German PPI data showed producer prices climbing a little more than expected, highlighting the inflationary pressures that remain in the manufacturing sector and could limit the euro's recent gains.

Expected Ranges

  • GBP/USD: 1.3670 - 1.3715 ▲
  • GBP/EUR: 1.1655 - 1.1685 ▲
  • EUR/USD: 1.1705 - 1.1735 ▼