The Pound is plummeting. Overview for 29.08.2022
GBPUSD is plunging and updating its multi-month lows.
The Pound Sterling can’t help plummeting against the USD. The current quote for the instrument is 1.1674.
Apart from the strong ”greenback” factor and global risk aversion, negative news came from the British energy regulator, The Office of Gas and Electricity Markets (Ofgem).
The regulator said that an average energy bill for households in the country would rise by 80%, up to £3,549. The reason is simple – the energy crisis in Europe. The HM Treasury quickly responded and said that it was thoroughly working on developing new options to support households with energy subsidies. However, it didn’t cheer anyone up.
The energy price surge will push inflation and aggravate the UK’s economic situation. Right now, it’s quite vague how authorities are planning to handle that.
However, investors shouldn’t definitely count on the Bank of England – the regulator will raise the benchmark interest rate at its own pace, because it doesn’t make any sense to try and catch the US FOMC. In addition, as long as energy supplies and prices aren’t stable, inflation will continue rising. And monetary mechanisms can’t help here.
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