The British Pound Sinks to New Depths as the USD Moves in a Risk-Off

British Pounds

The British Pound is trading at levels not seen since the Bretton Woods monetary system was abandoned in 1972. The US Dollar continues to trade higher as assets perceived as safe havens are being sought.

Sterling fell on Monday following the mini budget delivered on Friday, which made the market inquisitive about the UK’s financial position after significant tax cuts were announced.

There have been speculations that these cuts might cause the Bank of England to Act by hiking interest rates or buying GBP/USD in the forex market.

Last week, the Bank of Japan bought USD/JPY for the first time in 24 years. Japan’s Finance Minister Shunichi Suzuki  stated today, in respect of the Bank of Japan, “We’re strongly concerned about speculative moves, and there’s no change in our stance that we’ll respond as needed.”

USD/JPY traded back above 144 on Monday, and a move above 145 will be closely monitored by the market for a reaction from the BoJ.

The USD keeps surging in the forex market, reaching a 20-year high against the Euro.

Equity markets are currently scrambling as recession risks are being priced in by stock markets. China is slightly in the green after Covid-19-related restrictions have eased.

Commodities are also up in the storm in the market as the WTI futures contract approaches US$ 78 bbl while the Brent contract dipped below US$ 86 bbl. Gold is slightly lower, trading under US$ 1,640.

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