Tuesday’s trading session saw the pound sold off against many of its main counterparts. Versus the US Dollar, sterling dropped down to the low $1.16s as the divergence between the US and UK economies widens. Another major global bank highlighted concerns over the pending steep rises in UK inflation with estimates of it reaching 22% early next year. Along with uncertainty over the political outlook and the only option participants had was to continue to offload the beleaguered currency.
The pound also fell against the euro, falling to its lowest level on a multi-month basis. €1.16 now acts as soft support with further support down at €1.1480. Given the soft outlook for the eurozone, the pound should fare a lot better against the shared currency and a short-term bounce cannot be ruled out.
Today’s economic calendar sees eurozone inflation and GDP prints. US ADP job numbers are also scheduled today with the data crossing the wires at 13.15.
Written by Viv Savani. 7:08am, August 31st 2022
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