Pressure builds for Boris, volatility on the way for sterling?

By Luke Dyson

For the week so far we have seen some big announcements as of yesterday which will drastically affect GBP, EUR and USD in the weeks to come.

At present Sterling is holding its strength to some extent against the Euro with a slight gain being made however we have seen a multiple cent drop against the dollar, with GBP/USD now trading at the lowest point since March 2020 making it an excellent opportunity to sell dollars if you have an up and coming requirement.

As of yesterday evening Rishi Sunak and Sajid Javid resigned as chancellor and health secretary as they no longer believe in Boris’s leadership following on from the Chris Pincher row. With the two stating the following:

Sunak  – “need to know that whilst there is a path to a better future, it is not an easy one… In preparation for our proposed joint speech on the economy next week, it has become clear to me that our approaches are fundamentally too different.

Javid – “I regret to say, however, that it is clear to me that this situation will not change under your leadership – and you have therefore lost my confidence too”

This has generated a massive blow for Boris and his continued leadership, with him now fighting for his political survival as the two resignations are deemed to not have been coordinated. This has now created a significant amount of uncertainty for the UK moving forward which could begin to damage sterling as it progresses.

For the Euro we have seen a sharp drop against the dollar with it now trading at the lowest point since 2003 following energy prices surging as Russia has shut a key gas transit pipeline. German Gas operator Gascade announced this yesterday following its metering point on the German border Mallnow going from 2,190,136 Kilowatts per hour to zero.

With these announcements all happening in a short space of each other you can expect some significant volatility to come in the coming days as these issues begin to progress. If you have an up and coming currency requirement please take advantage of the current rates whilst sterling still holds its strength as these could be significantly different in the days to come. Please get in touch with your currency consultant today to discuss a strategy to limit your risk.