Scotland Times

Thursday, Jun 13, 2024

Pound falls to lowest level since pandemic crash

Pound falls to lowest level since pandemic crash

Unemployment rise and prospect of new Scottish independence referendum fuel recession fears
The pound has fallen to its lowest level against the dollar since the onset of the Covid pandemic amid growing concern over the strength of the British economy.

Sterling dropped by more than a cent against the dollar to trade below $1.20 on foreign exchange markets for the first time since March 2020, as City traders reacted to mixed figures from the jobs market and the prospect of a fresh referendum on Scottish independence.

The currency also lost ground as the dollar strengthened to a fresh two-decade high in anticipation of the US Federal Reserve raising interest rates on Wednesday to tackle soaring inflation, possibly by as much as 0.75 percentage points. The Fed last raised rates by this amount in 1994.

Versus the euro, the pound fell more than 1% to about 86.81p, its lowest level since May last year.

Analysts said sterling was under pressure from a stronger dollar after unexpectedly high US inflation figures fuelled expectations for more aggressive rate hikes from the American central bank. With forecast for the UK to fall close to the bottom of global growth league tables next year, the Bank of England could be forced to take a more cautious approach when setting rates on Thursday despite inflation surging to the highest level since the early 1980s.

Threadneedle Street is expected to raise interest rates by 0.25 percentage points on Thursday, lifting its base rate to 1.25%.

The latest drop in the currency comes after the UK unemployment rate unexpectedly rose to 3.8% in the three months to April, up from 3.7% in March. City economists had forecast a decline to 3.6%.

Against a backdrop of negative developments for the strength of the pound, analysts said Nicola Sturgeon’s announcement on Tuesday that she was preparing for a new Scottish independence referendum was also weighing on the currency. Scotland’s first minister said on Tuesday she would update Holyrood on her plans “very soon indeed”.

Simon Harvey of financial trading company Monex Europe told the Reuters news agency: “If I were to isolate the move lower down to one event, I’d most probably say that the Scottish independence risk was the straw that broke the camel’s back.”

Related Articles

Scotland Times
UK Island Orkney council to look at proposals to become territory of Norway
Woman Awarded Over £100,000 After Being Fired for Transgender Tweet
A provocative study suggests: Left-Wing Extremism and its Unsettling Connection to Psychopathy and Narcissism
A Real woman
Brand new security footage has just been released to the public showing the Active shooter Audrey Elizabeth Hale drove to Covenant Church School in her Honda Fit this morning, parked, and shot her way into the building
China's foreign ministry branch in Hong Kong urges British gov't to stop the biased and double standards Hong Kong report
Double standards: UK lawmakers attack EU chief over Ireland claims
Democracy? Not for UK. UK PM rejects Scottish independence referendum, cancel democracy in BVI
UK urged to brace for economic storm
Women's own body dissatisfaction appears to influence their judgment of other women's body sizes
Prince William To Move Family Into Cottage Near Queen Elizabeth II
BOOOOOOS: Tony Blair receives royal honour
Captured Britons sentenced to death in Ukraine
Barbados PM Mia A. Mottley among Time Magazine’s 100 Most Influential People
Today's headlines
"Just One Of the Boys In School:" Years That Shaped Prince Charles
BVI Premier Rubbishes Claim Of Causing COI Delay
Comments on "Human Intelligence in a Digital Age" - A brilliant Speech by MI6 Chief Richard Moore, and the elephants neglected in the room
Bitcoin: BoE Deputy Gov wants to cancel democracy and protect the banks with regulations which infringe on people’s freedom, independence and benefits they get from their own money.
What are the Pandora Papers?
Taiwan-China relations at their 'worst in 40 years'
The attempt to hold accountable for the content of its clients' websites is like blaming Gutenberg for the NYT's fake news that dragged the US into the pointless war against the nuclear weapons Iraq never had