The British pound has lost its value against United State dollar Wednesday, after data indicated that inflation had risen to four decades recordwhich raises concerns about the UK entering a recession due to the loss of Consumer purchase powerWorst since the fifties.
At 3:05 p.m. GMT, Sterling was down 0.7% at $1.4225, after declining as much as 1% in morning trading. had a also Overnight, prior to the data, it briefly touched a two-week high at around $1.25.
The drop reflects most of gains made Tuesday when strong work market The data reinforced expectations that the Bank of England (BoE) will have to raise interest rates.
but the latest Inflation figures have fueled fears that this threat of Recession may ease how Away from the center bank You can go, having handed four rate Since dec.
“Yesterday it seemed like with pay growth rising Unemployment is very low, which means that bank king more area for maneuver,” said Susanna Streeter, senior investment and markets analyst In Hargreaves Lansdown (ed.).
“Now the costs are too high for the eye for consumers lead To reduce consumer spending powerwhich will have a profound effect on Produce in UK economy said.
Against the euro, the pound was also down About 0.2% at 84.67 pence.
consumer price economic inflation hit 9% in April, making Britain’s inflation rate The highest of Europe’s five largest economies and almost certainly of The G-7 countries with Canada and Japan have not yet reported the numbers for April. not likely to match Britain price growth.
“Of course , bank no want to be so aggressive that it is sending the UK into a deep recession, but knows it needs to pull some levers to try to keep cover on Streeter said.
Higher energy bills were the biggest inflation driver last month, the British family now facing the biggest cost-of- Live pressure since records started in fifties.
“The market is re-pricing growth Expectations in The United Kingdom, therefore, reconsidered how distant and doubtful in a way Whether the BoE will continue this trend, said Francesco Pesol, foreign exchange analyst at ING Bank.
the look for violent rate Rise from the US Federal Reserve (Fed) has also made The dollar more Attractive, which increases twice the pound.
“The downside risks are unlikely to fade or evaporate in the coming months and for The upside, in particular with Fed and US tightening economy Very good job, a move in near the $1.30 level should prove ING’s Bisol said.
Bisol said that concerns about the threat of Prospect trade The war between the European Union and Britain, following signals from the United Kingdom government on Tuesday of imminent changes into parts of Northern Ireland protocol also Suggest downside risks for Sterling pound.
