Pound Sterling (GBP) Exchange Rates Plunge as UK at ‘Significant Risk’ of a Recession
The Pound (GBP) fell heavily against its peers at the end of last week as the UK’s latest GDP figures made for some grim reading.
The Office for National Statistics reported the UK economy shrank 0.2% in the second quarter, the first contraction since 2012.
This prompted heavy Sterling losses as analysts began to speculate on the possibility of the UK falling into a recession.
Looking to the week ahead we may see the Pound extend these losses amid persistent political uncertainty.
GBP/EUR Exchange Rate Close to a Decade Low
The Pound to Euro (GBP/EUR) exchange rate was close to striking a decade low on Friday as the Sterling sell-off picked up momentum.
In broader trade the single currency was left mostly muted at the end at last week as Germany’s latest trade figures revealed a worrying contraction in exports in June.
Germany’s GDP figures will be in the spotlight on Wednesday. If the Eurozone’s largest economy contracted in the second quarter EUR exchange rates could fall.
GBP/USD Exchange Rate Losses Trimmed by Disappointing US PPI
The Pound to US Dollar (GBP/USD) exchange rate struck its lowest levels since January 2017 at the end of last week’s session as the pairing slumped over half a cent on the UK’s GDP figures.
However, the ‘Greenback’ was forced to relinquish some of these gains after the US Producer Price Index (PPI) came in below expectations in July.
This may bode poorly for this week’s US CPI figures, with a weak inflation reading in July likely to increase the chances of the Federal Reserve cutting interest rates again this year.
GBP/CAD Exchange Rate Tumbles despite Gloomy Canadian Jobs Report
Broad weakness in Sterling led the Pound to Canadian Dollar (GBP/CAD) exchange rate to plummet around a cent on Friday despite an increase in Canadian unemployment.
GBP/AUD Exchange Rate Firms as Iron Ore Prices Slide
After slumping around a cent on Friday, the Pound Australian Dollar (GBP/AUD) exchange rate began to find its feet again at the start of this week’s session as the ‘Aussie’ was undermined by another sharp drop in iron ore prices.
GBP/NZD Exchange Rate Buoyed by Weak NZ Card Spending
The Pound to New Zealand Dollar (GBP/NZD) exchange rate also opens this week on firmer footing, with the ‘Kiwi’ giving ground after domestic electronic card spending unexpectedly contracted in July, likely indicating that retail sales may remain weak in the third quarter.