UPDATE 1-Sterling pares weekly losses with afternoon bounce

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*Graphic: trade-weighted sterling since the Brexit vote tmsnrt.rs/2hwV9Hv (adds quote, rewrites)

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LONDON, Oct 1 (Businesshala) – Sterling eased deep weekly losses on Friday as sentiment eased in global financial markets, lifting riskier currencies and encouraging investors to exit the safe haven of the dollar.

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The pound fell to its lowest level of the year earlier this week, weakened by a UK shortage of truck drivers and a boom in energy prices, while a hawkish-sounding Federal Reserve and concerns about Chinese growth boosted the greenback .

“It was a perfect storm for sterling,” said Kit Jux, chief forex strategist at Societe Generale, “being partially reversed” this Friday.

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While the market has raised its hopes for the Bank of England to raise interest rates, the prospect of an impending monetary policy tightening has failed to prop up the currency.

“It’s been another grim week for the pound, which remained highly sensitive to swings in sentiment and still struggles to capitalize on the recent rapid revaluation of Bank of England rate expectations,” said Francesco Pesol, a strategist at ING. Has been doing.”

At 1430 GMT, the pound was up 0.5% against the euro at 85.50 pence and up 0.63% versus the dollar at $1.3562.

At this rate, sterling was on course for a weekly loss of around 0.8% against the dollar, a clear correction from the 1.5% weekly decline that was rising in morning trading.

The British pound was one of the strongest G10 currencies earlier this year as investors bet that the British economy will recover from the pandemic faster thanks to Britain’s rapid vaccination programme.

But that narrative has since crumble, with sterling eroding all of its strong 2021 gains and heading for annual losses.

Several British gas stations were still dry on Friday after a chaotic week, with panic-buying, fighting at pumps and drivers hoarding fuel in water bottles after a severe shortage of truck drivers strained supply chains to the breaking point. was seen.

Labor shortages in the wake of Brexit and the COVID pandemic have thrown some sectors of the economy into disarray, disrupting fuel and medicine deliveries and leaving 150,000 pigs on farms.

“The current gasoline crisis is underscoring the effects of Brexit, although Prime Minister Johnson is trying to make it all positive,” Commerzbank analyst Antje Prafke said in a morning note.

“The inflation scepter has not yet reared its ugly head, but remains a possibility,” he said, adding that post-Brexit fishing rights issues soured relations with France.

Data released by the Office for National Statistics showed the economy grew higher than previously thought in the April-June period, but it is set to slow as post-lockdown constraints, including a shortage of truck drivers Was done, weakened the recovery. (Reporting by Julian Ponthas, Editing by Mark Heinrich and Angus McSwan)

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