By Matthew Boyle
It was a strong day for the Pound yesterday, seeing it rise to the highest level against the Euro and the highest level against the USD in just over a week. The release of media reports suggesting a U-turn by the government on the mini-budget saw the Pound soar. Highlighting once again how poorly thought out and received Kwasi’s previous budget was, this allowed a reversal of what has been somewhat of a downward slide by the Pound in recent weeks. Whilst it was able to steal back significant ground against the single currency, it didn’t fare as well against the greenback with news US inflation rose by 0.4% in August but also benefitting from its safe haven currency status as global markets remain under pressure. With analysts suggesting US interest rates could rise to as much as 5% next year the Pound may have a tough time holding back the Dollar.
No matter how improved this budget might be it also mustn’t be overlooked that the ECB are set to continue bolster the Euro further – having raised rates by an unprecedented 0.75% to try to slow inflation which stands at 9.1%, the highest figure in over 50 years.
Given the rise in rates we have seen readers selling the Pound may want to consider taking opportunity, perhaps while they still can. The jump we have seen could well be based on rumour and given how poor the last budget for the Government was it would be easy not to buy in just yet. Combine this with the roaring strength of the Dollar and that the ECB look like they are only just warming up the Pound could be in for a hard time.
Add to this the ongoing cost of living crisis, magnified as the cold sets in given fuel costs it doesn’t look great for the Pound. Oh, and dare I say it and the possible impact it would bring…..what about Covid?
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