London Daily

Focus on the big picture.
Wednesday, Mar 29, 2023

Pound in biggest monthly fall against the dollar since 2016

Pound in biggest monthly fall against the dollar since 2016

Worries over the prospects for the UK economy led the pound to slide by about 5% against the US dollar in August.

The last time the pound fell so much against the dollar was in October 2016, in the aftermath of the Brexit vote.

Sterling sank again on Thursday morning, dipping below $1.16 on the currency markets.

Analysts said the fall reflects the darkening outlook for the economy, with consumers and businesses facing rising prices and soaring energy bills.

The Bank of England has predicted the UK will fall into recession towards the end of this year.

The weak pound means Brits travelling overseas will find their spending money will not stretch as far.

"Our economic prospects are not looking particularly good compared to the rest of the world," said Laura Lambie, senior investment director at Investec.

Ms Lambie said that recession fears were weighing on markets, with the investment bank Goldman Sachs warning this week that the UK could remain in recession until 2024.

A recession is defined as the economy getting smaller for two consecutive three-month periods.

August was also the worst month for the pound against the euro since the middle of last year.

UK government bonds - or debt - had their worst month for decades. Investors, worried about the riskiness of lending to the government, demanded higher returns for doing so, making it more expensive for the country to borrow money. In August, the yields, or the effective interest rate you would get, on some of those bonds have jumped the most since 1994.

Colin Ellis from ratings agency Moody's told the BBC's Today programme the jump in yields needed to be put in context. "Energy bills are very very high, and set to go up again. which means inflation is going to be high and that the Bank of England is raising interest rates in response.

"Those expectations for higher interest rates are part of what's driving these moves in the bond market at the moment."

However, he said: "We still have a stable outlook on our UK government rating so we see the risk as broadly balanced. We're not very concerned but of course a lot will depend on the policies that the next government chooses to put into place."


'Torrid month'


Fears have grown over the prospects for the UK economy after figures showed it shrank between April and June, with businesses and households feeling the impact of rising prices.

Those concerns were fuelled on Thursday, with a new study suggesting the manufacturing sector shrank in August for the first time since May 2020.

Separately, a report by the Resolution Foundation think tank said typical household disposable incomes are on course to fall by 10%, or £3,000, over this year and next, which is called the "the deepest living standards squeeze in a century".

The cost-of-living crisis is set to be the biggest challenge facing the new Prime Minister.

Both Rishi Sunak and Liz Truss have come under pressure to outline how they would support households if they succeed in getting the keys to Number 10.


''Grim forecasts about poverty spreading across the UK this winter highlight the deepening woes for the UK economy", said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

The Bank of England raised interest rates to 1.75% in August, while forecasting that the UK economy would fall into recession this year.

But Ms Streeter predicts that the Bank of England might be forced to slow down rate rises in the coming months, given the cost of living crisis.


Dollar strength


The pound's weakness is also a result of a strong dollar, analysts said.

The dollar is performing strongly due to US interest rate rises and because investors see it as a safer bet.

Last week, the head of the country's central bank, the Federal Reserve, indicated it would push ahead with further interest rate rises as it seeks to control inflation.

"The dollar has been exceptionally strong," Ms Lambie said.

"Also, the issues that we've had in Europe around energy do not have the same impact as the US, and I think economists are fairly agreed that the US will be the last to go into recession if they do go into recession at all, perhaps following the UK and Europe.

"So on both sides, from the sterling side and from the dollar side, that's really what has weakened sterling and strengthened the dollar."

Newsletter

Related Articles

London Daily
Close
0:00
0:00
Elon Musk and Others Call for Pause on A.I., Citing ‘Profound Risks to Society’
You're Beautiful - James Blunt (Boyce Avenue acoustic cover)
Nashville style execution
You Are So Beautiful
“We've had evidence prior to the pandemic that masks were largely ineffective at preventing community transmission of influenza “
Postmodern Jukebox European Tour Version
Former Starbucks CEO Howard Schultz:
An old French tune (by Georges Brassens) Pomplamoose ft. John Schroeder
Former Starbucks CEO Howard Schultz rejects being labeled a "billionaire"
Sattahip Motor Show 20
Jamie Dimon is being deposed over JPMorgan Chase role in Epstein lawsuits
SONATE AU CLAIR DE LUNE - Moonlight sonata
This is how an electric car saves all the energy that he would have spent if he had lived 50 years longer.
A kiss to build a dream on
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
Wiz Khalifa - See You Again ft. Charlie Puth, Furious
Social Media censoring users for saying the true
Wonderful Tonight - Eric Clapton (Boyce Avenue acoustic cover)
Smart Iranian fashion designer teaching dummy TV anchors lesson about reality
Mean Blues
AMERICA, 2023
La Chansonnette
U.S. charges FTX's Bankman-Fried with paying $40 million bribe
Pattaya Addicts
Fallen 'Crypto King' Who Owes Millions to Investors Was Kidnapped and Tortured
Franz Liszt - Liebestraum - Love Dream
Regulators blame social media for SVB's rapid collapse: 'Complete game changer'
Dream a little dream of me
AOC explains why she opposes banning TikTok
Tu Vuo' Fa' L'Americano - Hetty & the Jazzato Band
UK: Humza Yousaf replaces Nicola Sturgeon as SNP leader and first minister in Scotland
Unchained Melody sung like you've NEVER heard!
In a dramatic U-turn against His Government: Judicial Reform Legislation Must Be Halted, Says Israeli Defense Minister Yoav Gallant
Dave Brubeck - Take Five
Gordon Moore, a co-founder of Intel Corporation, died at 94
Édith Piaf - Non, Je Ne Regrette Rien (Sofie)
Powell: Silicon Valley Bank was an 'outlier'
Rondo Alla Turca
Bordeaux town hall set on fire in France pro democracy protest
Kiss of fire
Police violence in Paris
Ed Sheeran - Perfect (Amadeus violin cover instrumental)
Paris: Some of the police are stepping down and showing solidarity with the protesters.
Tom Jones - I´ll Never Fall In Love Again 1967, 1989, 2001
Donald Trump arrested – Twitter goes wild with doctored pictures
Israel Cachao López - Guajira Clásica
NYPD is setting up barricades outside Manhattan Criminal Court ahead of Trump arrest.
Edward Maya - Stereo Love (feat. Vika Jigulina) (Extended Mix)
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
Strauss - Radetzky March - Karajan
Home Secretary Suella Braverman tours potential migrant housing in Rwanda as asylum deal remains mired in legal challenges
La vie en rose
Goldman Sachs cuts outlook for European bank debt over Credit Suisse crisis
Despacito (Piano Cover) - Peter Bence
Paris Rioting vs Macron anti democratic law
The Temptations - My Girl (Smokey Robinson Tribute) 2006 Kennedy Cent
'Sexual Fantasy' Assignment At US School Outrages Parents
Orlando Cachaito Lopez Redencion
Orbán Viktor: the restructuring of the power relations in the whole of Europe is taking place
Edith Piaf - NON, JE NE REGRETTE RIEN
Credit Suisse to borrow $54 billion from Swiss central bank
RADETZKY MARCH-2008-Wien, New Year Concert
The BBC problem about China
Only you (And you alone)
Strikes-Hit UK Pledges 94 Billion Euros In Cost-Of-Living Budget
Beautiful in White x Canon in D (Piano Cover by Riyandi Kusuma)
Russian Hackers Preparing New Cyber Assault Against Ukraine
Strangers In The Night
"Will Fly Wherever International Law Allows": US Warns Russia After Drone Incident
Charles Aznavour - La Boheme
UK face biggest fall in spending power for 70 years
Summer time
Jeremy Hunt insists his Budget will get young parents and over-50s back into work
Sting and Stevie Wonder - Fragile (from Sting's 60th birthday concert)
If this was in Tehran, Moscow or Hong Kong
Aux Champs Elysees
Announcing GPT-4
Stand By Me - Ben E. King (Boyce Avenue acoustic cover)
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
La Mer (Beyond the Sea) – Avalon Jazz Band
Drew Barrymore
She
China is calling out the US, UK, and Australia on their submarine pact, claiming they are going further down a dangerous road
Nathalie Song by Enzo Petrachi Stjepan Hauser Cello
A brief banking situation report
Shape of My Heart - Sting (Boyce Avenue acoustic cover)
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Radiohead - Creep
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
Quizás,Quizás,Quizás - Andrea Bocelli - Jennifer Lopez
'No relation to the American SVB': India's SVC Bank acts to calm depositors amid brand name confusion.
Perhaps, Perhaps, Perhaps - Multi-Couples
Good news: The U.S. government is now guaranteeing all deposits, held by, Silicon Valley Bank, and the funds are available as of today
Pentatonix Havana
Silicon Valley Bank exec was Lehman Brothers CFO
Paula Cole - Autumn Leaves
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
Oscar Benton Bensonhurst Blues
Saudi Arabia has announced a major breakthrough in diplomacy with Iran after two years of intense talks
OH NANANA vs ABUSADAMENTE
Nina Simone - ”I Put A Spell On You”. Vezi aici cum cântă Jeremy Ragsd
NIGHTWISH - The Phantom Of The Opera
Motorshow 2016 Tanjay Negros Oriental
Monica Bellucci - Ti Amo
Michael Jackson - Billie Jean Milena The Voice France 2018
Michael Buble (Help Me Make It Through The Night) feat Loren Allred
Memories Canon In D - Maroon 5 (Boyce Avenue piano acoustic cover)
Matteo Simoni - Marina
Maroon 5 - One More Night
Maroon 5 - Memories
Mark Knopfler - Brothers In Arms (Berlin 2007 Live)
Mark Knopfler & Emmylou Harris - Romeo And Juliet (Real Live Roadrunni
Marina, Marina - The LUCKY DUCKIES intimist live concert at Guimarães
Major Lazer & DJ Snake – Lean On Mauranne The Voice France 2016
Love Theme from Romeo and Juliet - Joslin - Henri Mancini, Nino Rota
LoLa & Hauser - Love Story
Linkin Park Jay-Z - Numb Encore (Live 8 2005)
Hallelujah Mennel Ibtissem, The Voice France Leonard Cohen
Leonard Cohen - Dance Me to the End of Love
Leonard Cohen & Natasha Rostova - Dance me to the end of love
La casa de papel - Bella Ciao
La Camisa Negra
L'italiano (Toto Cutugno) - The Gypsy Queens
Juanes - La Camisa Negra
Jonathan and Charlotte - Britain's Got Talent 2012 Live Semi Final - U
John Powell - Assassin's Tango
Joe Cocker - You Can Leave Your Hat On (LIVE in Dortmund)
Joe Cocker - Unchain My Heart 2002 Live
Joe Cocker - A Whiter Shade Of Pale
Jay Z & Alicia Keys - Empire State of Mind LIVE
Jason Mraz - Im Yours (live)
Jarrod Radnich - Bohemian Rhapsody - Virtuosic Piano Solo
James Blunt - You're Beautiful
James Blunt - You're Beautiful & Bonfire Heart (Live at The Nobel Peac)
If You Go Away - Helen Merrill & Stan Getz (Tribute to Virna Lisi)
I'LL BE MISSING YOU
I Say a Little Prayer
Hotel California ( Eagles ) 1994 Live
Historia de un amor - Luz Casal. Vezi interpretarea Biancăi Sumanariu
Here Comes The Sun - The Beatles (Boyce Avenue acoustic cover) on Spot
Heart - Stairway to Heaven Led Zeppelin - Kennedy Center Honors
HAVANA by Camila Cabello Zumba Pre Cooldown TML Crew Kramer Pastra
HAUSER and Señorita - I Will Always Love You
HAUSER - Waka Waka
HAUSER - Sway
HAUSER - Lambada
HAUSER - Historia de un Amor
HAUSER - Despacito
Great Pretender
Georgia May Foote & Giovanni Pernice Samba to 'Volare' - Strictly Come
Gary Moore - Still Got The Blues
GIPSY KINGS VOLARE Penelope Cruz
Fugees - Killing Me Softly With His Song
French Latino - Historia de un Amor
For A Few Dollars More The Danish National Symphony Orchestra (Live)
Flashdance • What a Feeling • Irene Cara
Filip Rudan - “Someone You Loved” Audicija 4 The Voice Hrvatska Sez
Eric Clapton - Wonderful Tonight
Enya - Only Time
Enrique Iglesias - Bailando (English Version) ft. Sean Paul
Enrique Iglesias - Bailamos
Elena Yerevan Historia de un amor
Ed Sheeran - Shape of You (Official Music Video)
Ed Sheeran - Perfect Symphony [with Andrea Bocelli]
Ed Sheeran - Perfect (Official Music Video)
Easy On Me - Adele (Boyce Avenue 90’s style piano acoustic cover) on S
ERA - Ameno
ELENA YEREVAN- Cancion Del Mariachi-IN STUDIO-2017 DPR
Dust In The Wind - Kansas (Boyce Avenue acoustic cover)
Don't Let Me Be Misunderstood
Despacito x Shape Of You - Pentatonix
Deep Purple - Child In Time - Live (1970)
David Foster When A Man Loves A WomanIt's A Mans World (SealMichael Bo
Dance me to the end of Love ( Pi-Air Design )
Coolio - Gangsta's Paradise (feat. L.V.) [Official Music Video]
Conquest Of Paradise (Vangelis), played on Böhm Emporio organ
Cielito Lindo
Chico & The Gypsies - Bamboleo
Canción Del Mariachi - Antonio Banderas, Los Lobos • Desperado
Camila Cabello - Havana (Audio) ft. Young Thug
Camila Cabello - Havana ( cover by J.Fla )
California Dreamin' - The Mamas & The Papas José Feliciano (Boyce Ave
Buster Benton - Money Is The Name of The Game
Hallelujah Pentatonix
Bobby McFerrin - Don't Worry Be Happy (Official Music Video)
Bob Dylan - Knockin' On Heaven's Door Emilia The Voice Kids France
Besame Mucho - Cesaria Evora
Ben E. King - Stand by Me Sax Cover Alexandra Ilieva Thomann
Bella Ciao
Bella Ciao - INSTRUMENTAL
Beautiful in White x Canon in D (Piano Cover by Riyandi Kusuma)
Bad Romance - Vintage 1920's Gatsby Style Lady Gaga Cover ft. Ariana Savalas & Sarah Reich(1)
BELLA CIAO 2020 - KARAOKE ITALIANO
BAMBOLEO - Gipsy Kings • Antonio Banderas, Katya Virshilas
BAILANDO (original)
Awesome Ukrainian yodeler - SOFIA SHKIDCHENKO (with English subtitles)
Avicii - The Nights
Atom - The Great Gig in the Sky
Aretha Franklin - (You Make Me Feel Like) A Natural Woman (Official Ly
Antonio Banderas - Cancion del Mariachi (Desperado)
André Rieu - Zorba's Dance (Sirtaki)
André Rieu - Can't Help Falling In Love
André Rieu & Mirusia - Ave Maria
Andrew Reyes Elton John - Don't Let The Sun Go Down The Voice 2020 (
Andreas Kümmert Whiter Shade Of Pale The Voice of Germany 2013 Showd
And I Love You So
All About That Bass - Postmodern Jukebox European Tour Version
Alan Walker - Faded (Piano Cover)
Ain't No Sunshine -- Bill Withers (cover by Canen 12 y.o.)
African music
Adriana Vidović - “Creep” Audicija 4 The Voice Hrvatska Sezona 3
Adriana Vidović - “Believer” Nokaut 3 The Voice Hrvatska Sezona 3
A Fistful of Dollars - The Danish National Symphony Orchestra and Tuva
4 Beautiful Soundtracks Relaxing Piano [10min]
2CELLOS - Whole Lotta Love vs. Beethoven 5th Symphony [OFFICIAL VIDEO]
2CELLOS - Smooth Criminal (Live at Suntory Hall, Tokyo)
2CELLOS - Smells Like Teen Spirit [Live at Sydney Opera House]
2CELLOS - Despacito [OFFICIAL VIDEO]
13 Year Old Girl Playing Il Silenzio (The Silence) - André Rieu
094.All About That Bass
00 - SADNESS PART 1
(Ghost) Riders In the Sky (American Outlaws Live at Nassau Coliseum, 1
(Everything I Do) I Do It For You - Bryan Adams (Boyce Avenue ft. Conn
What a wonderful world
Moon river
×