LONDON, July 5 (Reuters) – Sterling slumped against the dollar, hitting a new two-year low on Tuesday as markets focused on safe-haven currencies after another surge in European gas price reignited recession fears.
Economists said the risks of Europe sliding into a recession were growing after a big jump in natural gas prices in both Europe and in Britain looked set to push inflation even higher. read more
The pound fell 1.6% against a strengthening dollar to $1.1909, its lowest level since March 2020, as the U.S. market reopened after a holiday on Monday.
Against other safe-haven currencies, sterling shed 1.4% to 161.8 yen , while against the Swiss franc sterling weakened 0.7% to 1.1550.
The Bank of England said on Tuesday that the economic outlook for Britain and the world had darkened and told banks to ramp up capital buffers to ensure they could weather the storm. read more
It also said it would conduct an in-depth analysis to enhance surveillance of “opaque” commodity markets after Russia’s invasion of Ukraine left the central bank without a full picture of risks and vulnerabilities. read more
“The pound is at clear risk of further losses given a weak economy and what we think are overextended BoE hike wagers,” said Shaun Osborne, Chief FX strategist at Scotiabank.
The BoE, trying to tackle soaring inflation without hurting the economy, has raised rates five times since December. Some market players expect a bigger increase of 50 basis points at the next meeting on Aug. 4.
Traders were looking for clues on the BoE’s monetary policy plans. BoE Chief Economist Huw Pill will speak on Wednesday and fellow Monetary Policy Committee member Catherine Mann will speak on Thursday.
Brexit-related risks in relation to a possible suspension of the Northern Ireland protocol were also a focus.
The British parliament is considering a new law which would unilaterally change customs arrangements between Britain and Northern Ireland that were initially agreed as part of its exit deal from the European Union. read more
Against a weak euro , sterling edged up 0.1% to 85.99 pence, after briefly hitting its highest level of 85.43 pence against the single currency since June 17.
The euro, heavily impacted by the gas prices surge, slumped 1.7% to a two-decade low of $1.0238 against the dollar.
Good job we can’t afford to go to US anymore anyway… /s
Fuel increase incoming. Yay.
[deleted]
I’ll get my dollars put back into pounds this week then. Nice one
The Dollar is up against the Pound and the Euro.
A weak pound means imports become more expensive, the traditional way to try and correct that is to raise interest rates.
Wonder if that’s one reason Sunak quit, so when the economic shit finally hits the fan he’ll say it’s the fault of whoever take over from him.
[deleted]
Perfect timing for this American’s visit next month
It will be interesting to see the pound worth less then the Dollar one day. Might even be worth less then the Euro. At which point why even have the pound.
I’m going on holiday go America later this year… and everything is going to be so expensive with how horrible the exchange rate is at the moment ! I remember in 2008 it was £1 = $2
Just for context the Euro just hit a 20 year low vs. the dollar.
It’s all due to UK being predicted to be recession compared to other countries which are less likely to sink into recession.
13 comments
LONDON, July 5 (Reuters) – Sterling slumped against the dollar, hitting a new two-year low on Tuesday as markets focused on safe-haven currencies after another surge in European gas price reignited recession fears.
Economists said the risks of Europe sliding into a recession were growing after a big jump in natural gas prices in both Europe and in Britain looked set to push inflation even higher. read more
The pound fell 1.6% against a strengthening dollar to $1.1909, its lowest level since March 2020, as the U.S. market reopened after a holiday on Monday.
Against other safe-haven currencies, sterling shed 1.4% to 161.8 yen , while against the Swiss franc sterling weakened 0.7% to 1.1550.
The Bank of England said on Tuesday that the economic outlook for Britain and the world had darkened and told banks to ramp up capital buffers to ensure they could weather the storm. read more
It also said it would conduct an in-depth analysis to enhance surveillance of “opaque” commodity markets after Russia’s invasion of Ukraine left the central bank without a full picture of risks and vulnerabilities. read more
“The pound is at clear risk of further losses given a weak economy and what we think are overextended BoE hike wagers,” said Shaun Osborne, Chief FX strategist at Scotiabank.
The BoE, trying to tackle soaring inflation without hurting the economy, has raised rates five times since December. Some market players expect a bigger increase of 50 basis points at the next meeting on Aug. 4.
Traders were looking for clues on the BoE’s monetary policy plans. BoE Chief Economist Huw Pill will speak on Wednesday and fellow Monetary Policy Committee member Catherine Mann will speak on Thursday.
Brexit-related risks in relation to a possible suspension of the Northern Ireland protocol were also a focus.
The British parliament is considering a new law which would unilaterally change customs arrangements between Britain and Northern Ireland that were initially agreed as part of its exit deal from the European Union. read more
Against a weak euro , sterling edged up 0.1% to 85.99 pence, after briefly hitting its highest level of 85.43 pence against the single currency since June 17.
The euro, heavily impacted by the gas prices surge, slumped 1.7% to a two-decade low of $1.0238 against the dollar.
Good job we can’t afford to go to US anymore anyway… /s
Fuel increase incoming. Yay.
[deleted]
I’ll get my dollars put back into pounds this week then. Nice one
The Dollar is up against the Pound and the Euro.
A weak pound means imports become more expensive, the traditional way to try and correct that is to raise interest rates.
Wonder if that’s one reason Sunak quit, so when the economic shit finally hits the fan he’ll say it’s the fault of whoever take over from him.
[deleted]
Perfect timing for this American’s visit next month
It will be interesting to see the pound worth less then the Dollar one day. Might even be worth less then the Euro. At which point why even have the pound.
I’m going on holiday go America later this year… and everything is going to be so expensive with how horrible the exchange rate is at the moment ! I remember in 2008 it was £1 = $2
Just for context the Euro just hit a 20 year low vs. the dollar.
It’s all due to UK being predicted to be recession compared to other countries which are less likely to sink into recession.
Growth of 0% doesn’t help either.