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JP Morgan analysts bring more GBP gloom to light

JP Morgan analysts bring more GBP gloom to light

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The spectacular collapse in the value of the British pound over the past few days has been all over the news, representing a sharp decline after a steady decline over the past few months.

This week’s decline was driven by forecasts from analysts at Citigroup that UK inflation could potentially approach 18% by January 2023, sending a stark warning to 1.18 against the US dollar on Monday morning. to the market that the confidence level is low.

Today, pessimistic criteria have been unleashed on an already exhausted national economy as JP Morgan, another Tier 1 investment bank that is among Citigroup’s leading interbank currency traders, has publicly expressed its opinion should a domestic energy crisis emerge. In Great Britain this winter, the value of the British pound may rise to 1.14 against the US dollar.

If this were to materialize, it would put the British pound at its lowest value against the US dollar in more than two years.

Over the course of 2022, the British pound has fallen a significant 12% against the US dollar, and is therefore beginning to reflect concerns that higher gas prices will fuel inflation as economic growth slows.

Energy prices have become a huge issue for British households recently, with predictions that the average annual electricity bill per household could rise by £5,000 by the end of this year, while inflation and interest rate rises continue to peak. This has sparked numerous protest movements across the UK, including large groups advocating mass non-payment of energy bills to send a message to the government and energy companies that unsustainable development and fuel poverty will not be tolerated.

Such unrest is very rare in the UK and therefore shows the magnitude of the cost of living crisis and only adds further to the bearish sentiment in the minds of currency traders.

Certainly, volatility has returned to the limelight among major currencies, and according to analysts at major banks, it looks set to continue predictably for some time.

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