Pound subdued as UK economic recovery slows

  • Pound subdued as UK economic recovery slows

     

    GBP exchange rates have been muted in recent weeks amid rising Covid cases and a slowing economic recovery.

    GBP/EUR fluctuated between €1.17 and €1.16, bouncing off a six-week low, while EUR/GBP ranged by about half a penny, just shy of £0.86.

    GBP/USD has climbed from $1.36 to $1.39, while EUR/USD rose from $1.17 to $1.19.

    Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…

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    What’s been happening?

    The pound has faced headwinds in recent weeks as UK Covid cases continue to rise and the UK struggles amid a supply chain crisis, both of which are affecting the UK’s economic recovery. However, sterling has showed surprising resilience.

    Mixed data has caused turbulence for the euro, with some bumps in the road for the Eurozone’s economic recovery, particularly in Germany.

    Meanwhile, an increased appetite for risk and hesitancy from the Federal Reserve over tightening monetary policy have seen the safe-haven US dollar drop to monthly lows.

     

    What do you need to look out for? 

    UK inflation is currently forecast to jump to 2.7% in the next CPI reading, which may boost the pound by piling pressure on the Bank of England to act.

    With inflation hitting a ten-year high of 3%, EUR investors will be looking to see how the European Central Bank (ECB) responds in September’s policy decision.

    The Fed disappointed investors by keeping quiet about a potential tapering timeline, but any updates in the coming weeks could cause a lot of movement in USD.

     

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