By Matthew Vassallo
The Pound has once again flattered to deceive over recent days, following yet another false dawn this week. Sterling’s early week rally against both the EUR & USD, which was brought about by an upturn in UK/EU relations following the announcement that common ground had finally been found and a deal struck between the two over the NI/EU post-Brexit trade deal, was once again stopped in its tracks during Thursday’s trading. This was potentially due to an over enthusiastic market in which investors, potentially buoyed by the first real sense of optimism since the turn of the year, had overpriced in Sterling’s perceived potential improvement.
GBP had ended February on an upward trajectory, with the markets and investors seemingly starting to thaw, following a prolonged period of stagnation for Sterling. This downturn for the currency was in line with the protracted recovery of the UK economy, which has had to contend with generational high inflation figures and a cost of living crisis, which has been amplified by the war in Ukraine, a Covid ravaged economy and a growing sense amongst business leaders and analysts that the economic fallout for the UK following its detachment from the EU was far greater than some political figures had led us to believe would be the case.
Whilst the current cost of living crisis and high inflation numbers are issues facing the majority of the world’s economies, it is the UK’s alarmingly slow recovery when comparing to the leading global powerhouses, which is the main concern according to a recent poll amongst the UK’s leading business owners.
Whilst there is a cautious optimism that March may bring some more sustainable improvement, with signs that inflation numbers are consistently starting to fall and with the bank of England’s policy meeting on the 23rd March perhaps a more positive one in terms of their economic outlook, for now it would seem investors remain unconvinced until proven otherwise.