By Ashley Finill
It’s been a tough start to the week for Sterling as against the Euro as we head into Wednesday. Over the past 48 hours we have seen nearly 2 cents lost on the single currency since this week’s trading recommenced on Sunday evening. There are several factors at play as to why Sterling is continuing on this rocky road to recovery from the lows seen throughout the pandemic. The UK economy continues to be in a crippled state due to rising inflation in the country and with prices continuing to rise it’s hard to see any respite for the pound’s woes. Last week, inflation recorded its highest reading for 41 years posting a figure of 9% and as data suggests this could increase in the following months which could almost certainly see the UK enter into a recession. Negative economic data seems to keep on coming in the UK as yesterday PMI data was released early doors which suggested that the economy was close to contracting in May and things are even worse now than they had been during the pandemic. PMI was expected to read a figure of 57 sightly down from the previous 58.9 in April however the figure posted at 51.8. This month-on-month loss is nearly unprecedented and is the fourth largest on record and exceeded anything seen since before the pandemic. As a result of yesterday’s poor PMI reading Sterling slumped against the Euros losing over a cent on a half before 9am and struggled to make any ground on the single currency throughout the days trading. With little to no growth with the UK’s economy we could start to see more of the same as this week and Sterling paying the price and the Euro taking advantage over the pound.
Anticipation on Sue Gray Report
Pressure could be mounting again on prime minister Boris Johnson over partygate. Although it was announced last week that Boris is no longer under investigation by the police and no further fines are to be issued there is still the highly anticipated Sue Gray report to be published which is expected to be released today. However, on Monday ITV released an image which shows the prime minister at an alleged gathering which he had denied being part of and had said in the house of commons that he didn’t have any knowledge of. The report will document the MPs and aides who have received fines from the parties held at no10 and those who received repeat offences, although Boris is not one of them. Prime Minister’s Questions take place later today in the House of Commons at 12pm, with Kier Starmer himself being under investigation by the police for gatherings during lockdown who will surely put questions to the Boris on the alleged attendance of a gathering he categorically said he knew anything about.
Cost of living Crisis announcement expected today
The Government are expected today to announce a multi billion-pound package to help with cost of living in the UK. The package is expected to be signed off by Boris Johnson today and delivered later by the Chancellor of the Exchequer Rishi Sunak. This comes as after an announcement yesterday from Ofgem that the UK’s energy price cap is expected to rise in October to around £2,800, an increase of £830.With the cost of living increasing at an alarming rate in the UK the public have been eagerly awaiting help from the government to help and today’s announcement may bring some good news. However, the timing of the announcement has already come under some scrutiny amongst members of the opposition on social media and members of the public as a diversion tactic to draw heat away from the report released later today. With the report and news of this announcement from the government on aiding the help of living crisis, we can expect some uncertainty and volatility in the market, so if you have a currency requirement coming up it may be prudent to get in contact with your currency consultant so you are not caught out by the unpredictable currency market.