By Matthew Vassallo
The Pound has found life tough going over recent weeks, with this downturn particularly evident against the US Dollar. GBP/USD rates had fallen by over 4 cents in the space of 6 week, with rising oil prices, escalating tensions in the Middle East & Eastern Europe and a noticeable contraction in the global financial markets, all driving factors behind the USD’s rise.
Whilst USD sellers were on the verge of selling their positions against GBP at the highest levels seen since last September’s now infamous mini-budget announcement by Liz Truss, it is perhaps poignant that despite Sterling’s recent woes, it found sufficient support to move it away from that relative financial precipice. In fact, over the course of this week the Pound has managed to claw back around a cent and a half against the USD & three quarters of a cent against its Euro counterpart.
Whilst the economic constraints facing the UK for the majority of the first three quarters of this year remain, it seems as though investors are gearing up towards the very real prospect of a change in government inside number 10, ahead of next year’s UK general election. With the Conservative party in continued disarray, it would seem Keir Starmer and the Labour party are a Prime Minister and governing party in waiting. However, with serious questions being asked due to a lack of details in Labour’s proposed policy changes, and 12 months being an almost infinite period when things could change in the world of politics, only time will tell us whether the likely changes at the top will bring with them the necessary optimism and a more positive economic outlook.
Looking ahead today and the latest Eurozone Industrial Production data released this morning, along with ECB President Christine Lagarde’s speech this afternoon, could provide the Euro with a boost if her usual cautiously optimistic rhetoric has the relative impact on investors.