– GBP endures 1.0% declines
– As gas prices surge higher
– Fears of UK stagflation grow
- Market rates at publication:
GBP/EUR: 1.1593 | GBP/USD: 1.3550
- Bank transfer rates:
1.1368 | 1.3270
- Specialist transfer rates:
1.1535 | 1.3482
The British Pound suffered a significant loss in value against all the world’s major currencies over the course of the past 24 hours and looks vulnerable in the midweek session, as investors fear the UK is headed for a ‘winter of discontent.
Fuel queues at filling stations and surging energy prices mean the UK economy will likely suffer a surge in inflation over the coming months, while economic growth rates will fall.
“This is a GBP-negative scenario,” says George Vessey, UK Currency Strategist at Western Union. “The UK fuel panic combined with the gas shortage also threatens to further disrupt the UK economic recovery – impacting the efficiency and profitability of businesses.”
The Bank of England could meanwhile find itself with little choice but to raise interest rates to try and fight inflation fearing it might become entrenched as inflation expectations amongst consumers and businesses grow in response to supply-side shocks.