Pound US Dollar (GBP/USD) Exchange Rate Sours as Cost-of-Living Crisis Weighs Heavy
The Pound US Dollar (GBP/USD) exchange rate is slipping today as the cost-of-living crisis impacts retailers on Black Friday amid strikes and slashed spending.
At time of writing, the GBP/USD exchange rate is around $1.2128, a 0.32% drop from this morning’s opening levels.
Pound (GBP) Undermined by Living Cost Squeeze
The Pound (GBP) is struggling to muster much support this morning amid a lack of major data. Black Friday could be bleak as consumers are set to slash spending amid the cost-of-living crisis. Postal strikes are set to disrupt the holiday season, further weighing on Sterling.
Retailers hoping to kick-start the holiday season, Black Friday has recently been a boon for high street and online stores as consumers take advantage of pre-Christmas sales. However, economists are warning that the cost-of-living squeeze could see spending drastically cut back. The Centre for Economics and Business Research (CEBR) warns that Black Friday won’t necessarily save struggling retailers:
‘The cost-of-living crisis, combined with warnings that discounts are often more generous at other times of year and the threat of a Royal Mail strike, will mean that it is a weak year for Black Friday sales, and we may see January sales start early in an attempt to shift stock.’
Meanwhile, the wave of industrial action continues to grow, with Royal Mail postal workers striking outside offices today. To join them, nurses will be staging walkouts on 15 and 20 December for the first time in their history. The Royal College of Nurses (RCN) confirmed the strikes as ministers disregarded their calls for improved pay and working conditions. It is expected to be the first of many strikes to take place over the winter and spring. RCN General Secretary Pat Cullen said:
‘Ministers have had more than two weeks since we confirmed that our members felt such injustice that they would strike for the first time.
‘My offer of formal negotiations was declined and, instead, ministers have chosen strike action.’
US Dollar (USD) Buoyant amid the Thanksgiving Holiday
Meanwhile, the US Dollar is strengthening this morning as it recovered from its slump yesterday. Downbeat data and a dovish Federal Reserve has pared interest rate expectations, but a risk-off mood is boosting the ‘Greenback’.
A risk-off impulse has increased safe-haven flows as continually troubling news out of China weighs on the global market sentiment. Surging Covid infections threaten to derail the world’s second largest economy amid China’s strict zero-Covid policy. Reports of 32,695 cases set another daily record of infections. Mass testing and increased restrictions in Shanghai, Beijing, and Guangzhou have been ordered by Chinese authorities.
Pound US Dollar Exchange Rate Forecast: Sterling to Sink on Domestic Woes?
Looking ahead, the Pound US Dollar exchange rate could see further movement as a lack of major data will see the pairing trade on domestic and market moods. Persistent industrial action could weigh heavily on the UK economy, and the Pound.
Meanwhile, the US Dollar will also be left to market sentiment. A continued risk-off mood could see safe-haven currencies like the ‘Greenback’ supported.