Today the pound sterling registers significant falls against the dollar, from 1.11% to a cross of 1.1115 dollars for each British currency. And the forecast of the experts is that it will continue to fall in the near future, given the headwinds of the economy and the monetary policy of the Bank of England. The three-month risk investment of the pound – an indicator of the direction that it is expected to take in that period – remains in negative territory, the Bloomberg agency indicates.
With consumer confidence near record lows in October, signs are growing that sterling may extend a slide that has hit 17% this year.
“I expect the pound to remain under pressure and that international investor confidence in gilts and sterling will take time to recover”, warns Patrick Bennett, a strategist at the Canadian Imperial Bank of Commerce, who predicts that the currency may fall to 1.09 dollars by the end of the year. “After the personnel changes to date, the hurdle to regaining that trust is getting higher and higher.”
The currency’s next sign may come from the government’s fiscal plan, as the Times reports that new finance minister Jeremy Hunt is likely to delay announcing the plan beyond October 31, while his successor is known. of Truss.
“The UK budget and government will have to demonstrate a return to fiscal discipline, basically a credible fiscal path,” Christopher Wong, strategist at Oversea-Chinese Banking, told Bloomberg.
An even bigger problem for the pound may be the Bank of England’s monetary policy stance, after Deputy Governor Ben Broadbent said on Thursday that it is not clear that British interest rates need to rise as much as investors expect. “We are bearish on the pound, but more because of the mix of stagflation and doubts about whether the Bank of England will be as aggressive as it needs to be,” says Tim Baker of Deutsche Bank.