The GBP/USD hit lows that have not been seen since the mid-1980s this past week. It bounced since then, albeit positively for the USD alone. The British pound pulled back from last week’s near four-decade low against the US dollar, though short of positives as its downtrend remains.
The Bank of England has postponed its September interest-rate conclave to the 22nd rather than the 15th as a mark of respect for the death of the Queen. So, their decision might come after the new Chancellor of the Exchequer Kwarsi Kwarteng outlines his fiscal plans, although the national mourning period creates uncertainty.
Although the government has reaffirmed the Bank of England’s independence, all the same, it may not want to tighten monetary policy so soon, which could be yet another factor weighing down sterling.
According to official data, the UK economy grew by 0.2% in July, returning to expansion, if anemically, after a sharp drop in the previous month. However, the three-month average growth rate was 0%, for an annual growth rate of 2.3%.
There may be some respite for the pound if only because of the sheer magnitude of the hammering it has received this year.