UK economy on brink: Pound crashes against US dollar and euro – worst yet to come

1 min


UK economy on brink: Pound crashes against US dollar and euro – worst yet to come

The pound has suffered more losses against major global markets as the UK’s GDP slumps in the first financial quarter and Government borrowing set to reach £300billion. Sterling is in its fourth consecutive day of losses and is the worst performing G10 currency so far this month.

The pound has fallen more than three percent against the US dollar since the end of April.

As of 7am this morning, sterling hit a five-week low against the US currency and was trading at just £1-$ 1.2166

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Meanwhile against the euro, the pound hit a six-week low on Wednesday and has failed to make any significant gains this afternoon.

Against the European currency the pound was trading a lows of 88.58 pence per euro.

Vassilis Karamanis FX & Rates Strategist at Bloomberg warned the pound is showing little sign of recovery and predicts a further slide is one the way.

He said: “As the pound extends the deepest slump among developed-world currencies.

“A host of market indicators are converging to suggest the worst is yet to come.”

The Bank of England (BoE) has already slashed its main interest rate to its lowest ever level of just 0.1 per cent in March.

BoE governor Andrew Bailey has since ruled out cutting interest rates below zero.

His comments came after official figures revealed the UK economy shrank by two percent in the first three months of 2020.

In March alone the UK economy shrank by 5.8 percent prompting Mr Bailey to echo the words of the Chancellor Rishi Sunak that the UK is on course for a recession.

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READ MORE: Universal Credit: Does self employed grant affect Universal Credit?

Today the Office for Budget Responsibility (OBR) painted a bleak picture for the UK economy and forecast GDP could fall by 35 percent in the second financial quarter from April to June.

The OBR also warned Government borrowing could hit £298.4 billion by the end of the year.

The fiscal watchdog said this was an increase of £25.5bn from estimates made just last month.

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