GBP now flat for the year versus US dollar
The pound has fallen to its lowest point against the dollar in 2021 amid fears that the UK could see high inflation and lower growth.
Despite an early interest rate rise being anticipated, the pound is beginning to “behave like an emergency market currency” said a City strategist, as drivers queued up for fuel across the country.
Governor of the Bank of England Andrew Bailey also warned that the economy is seeing worse than expected growth.
“I expect us to be back to the pre-pandemic level in the early part of next year, possibly a month or two later than we thought we would be at the start of August,” Bailey told a European Central Bank panel.
The pound dropped to its lowest level against the dollar since December 2020 amid talk of stagflation.
Having been one of the best performing currencies this year on the back of the vaccine roll-out, sterling is now flat against the dollar over the course of 2021.
“The pound is still suffering from the perception of domestic shortages, higher inflation and the prospect of a winter of discontent,” Neil Jones, head of FX sales at Mizuho Bank, said.