A little bit of hope for the British Pound
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This morning, the British pound made an interesting reversal, gaining very little against the US dollar in the early hours of the London trading day this morning.
Currently, the GBPUSD pair is trading at 1.16, a slight uptick for the struggling British pound, which has been in a long lull, culminating in a complete collapse on Friday last week, from which it has not recovered. from
This morning’s slight rally has shown a slight shift in sentiment towards the British pound, but it still has a long way to go before it is close to its early August valuation of 1.23.
However, the geopolitical backdrop to this slight rally in the pound points to a possible looming blow to the UK and continental European economies, as recent news of a halt in gas flows through a major gas pipeline to Europe has fueled fears of an impending energy crisis.
With energy costs already very high and continuing to rise in the UK, this is certainly news that is likely to focus the attention of many traders and analysts.
The Bank of England already faces a tough challenge with expectations of a recession in the last quarter of this year, but money markets have raised their interest rate bets for the September encounter by around 4 basis points since Monday this week. A rise of 75 basis points is still possible, but some sentiment suggests that the Bank of England may not continue with sharp rate hikes throughout the winter as household consumers face energy bill difficulties.
This unpredictability of major currencies, particularly the euro and the British pound, against the US dollar is interesting and represents a departure from two decades of near-static currency markets.
The fiat currency environment and the approach of central banks today is very different than it was just two years ago, and volatility is very much part of the job.
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