The Pound US Dollar (GBP/USD) exchange rate fluctuated wildly last week, as political chaos in the took hold of the pairing.
What’s Been Happening: UK Political Headlines Rock the Pound
The Pound US Dollar exchange rate began the week on a weak note, as the Bank of England (BoE) began further intervention measures, aiming to provide some relief to GBP investors as the gilt market continued to spiral.
The middle of the week saw Sterling begin to rally, as the gilt market continued to improve, culminating in a strong tailwind on Thursday as rumours began to swirl of further tax cut U-turns from former Chancellor Kwasi Kwarteng.
Friday saw the Pound rocked as Kwarteng was sacked and replaced by Jeremy Hunt, while Liz Truss’s press conference announcing the scrapping of plans to cut corporation tax injected further volatility into Sterling.
Meanwhile, the US Dollar stayed subdued during the first half of the week, as a risk-off market mood prevailed.
After a short-lived spike after US inflation data was released, a souring market mood allowed the US Dollar to soar at the end of the week.
Three Things to Watch for This Week
- Chancellor Jeremy Hunt’s Economic Plans
The spotlight will be on the UK’s new Chancellor Jeremy Hunt this week. Will his fiscal pragmatism buoy the Pound?
- UK Inflation Rate
The latest UK inflation rate figures may also be a strong influence on the Pound. Another forecast-matching print could dent the Pound.
- US Initial Jobless Claims
The key presser for US investors is likely to be the US’ latest jobless claims. Another above print release could bolster USD.
Pound US Dollar Outlook
The Pound US Dollar exchange rate is likely to continue last week’s turbulence, as UK fiscal and political uncertainty continues. While Jeremy Hunt’s policies are getting GBP off to a positive start, Liz Truss remains in a tenuous position, with any further setbacks likely to create further volatility for the pairing.