GBP/USD
These past few days the Pound has taken a hammering, pushing it down a very slippery slope and sliding down to its lowest levels seen since September 2020. This comes as the Pound has attracted lots of unwanted pressure which has evidently weighed on it all too much. As it currently stands, this downwards pressure is being fueled by an array of disappointing economic reports from the UK, hinting at the monumental strain that is on the British economy. On Friday, the largest fall of the rate was sighted as the Office for National Statistics reported that the UK’s Retail Sales volumes fell 1.4% MoM in March as inflation continues to soar. This data showed the highest loss of momentum in this sector since Omicron hit businesses last year. On top of this, Consumer Confidence reports released in the UK showed almost the lowest levels since the ones recorded around the time of the financial crisis in 2008. On the other hand, the US dollar shot to a more than two-year high amid heightening expectations that the Fed would tighten its monetary policy at a faster pace to combat stubbornly high inflationary levels in the States. With no important data scheduled from the UK, the Dollar and its recent strength will likely capitalise on this leaving the Pound vulnerable and potential for it to drop even further.
GBP/EUR
The Pound performed no better against the Euro, with the rate also falling significantly over the course of last week, on Friday it saw one of the largest declines in quite some time in which the rate tumbled downwards by over 1%. Currently, the Pound is still fighting a difficult battle to stay put as intense headwinds do not ease following the recent poor performance of data relating to the UK economy and the still present cost of living crisis. Concerns over the cost of living and the cost of doing business remain uppermost in the minds of private sector business with inflationary rises the second highest since 1998. Prices of some commodities hit record highs, with costs for transport, energy and salaries showing no sign of easing as 84% of supply chain managers in manufacturing reported paying more for their purchases. Looking at the Euro, it has found a degree of support as Emmanuel Macron secured a second term as French President, easing some pressure on the currency. On top of this, recent data released in the Eurozone beat consensus, providing additional support for the Euro. In the meantime, an absence of data from the UK may mean that these losses have the potential to extend throughout the rest of this week as the Pound is left vulnerable.
Published by Frank Brightman (25/04/2022)