The pound started the week with extreme volatility, crashing almost 5% against the greenback at one point down to all-time lows of $1.0327. Across the European dealing morning, the pound did manage to recover. Speculation over potential action from the Bank pushed sterling higher against its peers, allowing it to pare some of the day’s losses.
The Bank of England issued a statement late in the day. No action was taken, they simply stated that they are monitoring the situation very closely. Sterling’s reaction was negative, the pound slipped almost 2% against the euro and US dollar as expectations for an emergency rate rise were crushed.
Sentiment has been broadly positive overnight in the Asian session, the pound has rallied back towards €1.12 and $1.08 versus the euro and US dollar, respectively. Many will be observing the situation closely and monitoring for soundbites from government and BoE officials today. The pound will require further reassuring words if it is to begin to recover from the overwhelming damage created since Friday morning.
Written by Viv Savani. 6:30am, September 27th 2022
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