By Ashley Finill
This week, Sterling slumped miserably against both the Dollar and the Euro wiping out some of its hard-fought recovery from its losses throughout the pandemic. During this week’s trading Sterling succumbed to the rising gas price crisis in the UK, Putin announcing Russian Gas is to be paid in Roubles only and Boris Johnson chatting gas about parties at Number 10, subsequently with police issuing fines for attendees of said parties with more likely to follow. All this swept Sterling into uncertainty amongst investors which ignited the sharpest fall for the Pound against both the majors since the lockdown in the UK was announced in March 2020.
Brits Feeling the Squeeze
Today on April fool’s day 22 million households in the UK suffer a huge rise in their energy bills as the price cap rises to a record sum which is certainly no joke. This is squeezing the pockets of many Brits as fuel and food prices have soared in the past few months. Rishi Sunak had provided some support for British public with his Spring Statement last week, however with prices rises so sharply it is only a dent on in what is a tough time on consumers. Sunak also cut fuel duty by 6p however there is ill feeling in the UK as this does not seem to have been passed on by petrol stations with the average price of forecast only falling by half the cut. Inflation continued to rise in the UK last month to a decade high, the Bank of England have tried to counteract this by increasing interest rates 3 times in the past 6 months. Bank of England Governor Andrew Bailey has hinted this week that the BoE are unlikely to increase rates any further in the foreseeable future and has also said that next year the UK is likely to be heading a recession which could bring further misery for Sterling come 2023.
Putin Playing Hardball with the West
The Russian President Vladmir Putin last week threated that “unfriendly countries” will be required to pay for Russian Gas in Roubles after financial sanctions were imposed on the country following its invasion of Ukraine, which has started to cripple their economy. Now his threat is coming to fruition in an attempt to deter further sanctions on the country and make money for Russia. He has announced Russian gas must be paid for in full with Russian roubles through a Russian bank or face getting cut off. This could spell bad news for many European countries namely Germany whose full gas supply runs largely from Russia. Although peace talks have started positively with the Ukraine there will be some time to go before this conflict is over and whilst it’s still going on, expect the currency market to remain highly volatile in these uncertain times.
Sellers Heaven as Sterling Loses Ground Across the Board
Whilst Sterling is down this brings sellers delight in the currency market. This week has seen sharp falls across the board for the Pound bringing a great opportunity to those of you looking to sell your foreign currency. The dollar has made steady gains on the Pound with GBP/USD at its lowest level since October 2020, and as the UAE Dirham is pegged to the Greenback GBP/AED is also at new lows not seen since October 2020. Swiss Francs are up also gaining nearly 10 cents on Sterling in the past 12 months. Saving the best two till last being the more notable mentions for selling, firstly the Loonie as the Canadian Dollar has gained 10 cents within the last year on Sterling, a staggering increase for GBP/CAD which presents a great opportunity to sell at these highs not seen since October 2019. Secondly, the Australian Dollar is up have gained an incredible 17 cents on the pound over the past 12 months. If you want to take advantage and cash in on these lucrative exchange rates, then get in contact with your currency consultant here at A Place in the Sun Currency.