UK inflation is at 7%, the highest in 3 decades. Food, energy and petrol costs are moving higher. The British Pound to USD closed at 1.3058 for the week.
British Pound to USD moves below 1.31 as Inflation is at 3-Decade High
The GBP/USD trades below the 1.31 mark. High inflation in the United Kingdom and the strong US Dollar keep the Sterling under pressure.
GBP/USD hit the lowest rate at 1.2972 on April 13, 2022, at levels last seen in November 2020. But the British Pound strengthened by 147 pips on Wednesday, March 13.
It closed at 1.3058 for the week ended April 15, 2022.
The energy crisis from the Russian-Ukraine conflict has sent fuel prices surging in the UK and the European Union. Household bills are worsening with food prices moving higher. Wages increased slightly by 3.8% in the last quarter, while inflation rose by 7%.
Inflation Figures at 3-Decade High
Inflation is at 7% in March, higher than the February rate of 6.25%. It is the fastest in 30 years. The Office for National Statistics (ONS) releases inflation figures every month, known as the Consumer Prices Index (CPI).
ONS reports that inflation may rise to 8.7% if the Ukraine war worsens. The economic conditions of global countries are under pressure with the supply chain crisis and energy prices surging higher. Bank of England states that inflation rates may hit double digits by October if energy prices remain higher. Household expenses are worsening with crude prices and food prices increasing.
Bank of England increased interest rates three times to handle high inflationary pressures. Interest on borrowings and loans have surged higher, hurting individual income. The bank is forced to address inflationary problems through short-term interest rates. The British Pound to USD currency trading depends on the policy rates taken by the bank.
BoE will meet again in May with expectations that interest rates may see a 1% hike. The central bank will increase interest rates to handle inflation, and BoE may hike rates again to bring down the escalating costs in the country.
The labor market in the United Kingdom has been good as employment increases, strengthening the Sterling. But, the cost of living is zooming higher, and people blame Prime Minister Boris Johnson for the rising CPI.
GBP/JPY Trades Above 200 DMA
The British Pound to Japanese Yen currency pair prices surged to 165.51 levels on Friday, April 15. It closed for the weekend at 164.99. The GBP/JPY is trading at multi-year highs at levels last seen in February 2016.
Despite high inflation in the country, the Bank of Japan has no plans to hike rates. Interest rates in Japan are at the lowest rates.
The British Pound to Japanese Yen surged above the 200 DMA at 160.81 on April 15. It is trading at a multi-year high.
GBP/INR at 99.64 Level
The British Pound to Indian Rupee in the foreign currency exchange is 99.640. The GBP/INR rose by 100 pips on Wednesday, April 13. Currency converter 1 GBP is at 99.69 INR.
The GBP/INR has strong resistance at the 100 levels.
GBP/EUR Trades Below 1.21 Levels
The Pound to Euro today trades at 1.2080 levels.
The ECB decided to keep rates unchanged at its policy meeting in April 2022. High inflationary pressure and soaring prices impact consumer sentiment in the country. Supply chain disruptions are hurting the economy with the Ukraine-Russia conflict. The European Union depends on Russian crude imports. However, Russia demands payment in Ruble for its crude exports.
The British Pound to Euro currency pair was on an uptrend last week and trades just below the 1.21 level. GBP/EUR is at a multi-week high. If it crosses the 1.2103 mark, the British Pound to Euro currency pair in the forex market may zoom higher.
The US Dollar Index Trades Above 100 Mark
Inflation in the US is at a 4-decade high. The US Bureau of Labor Statistics reports the Consumer Price Index at 8.5% in March.
The Fed has taken steps to tighten monetary policies.
The US Dollar trades above the 100 level and shows a bullish trend for the short term. The Dollar gains strength from the rise in US yields. The DXY shot to 100.770 levels during trading hours on Thursday, April 15, 2022.
The greenback strengthened to two-year highs, trading at levels last seen in May 2020.
Experts predict gold prices to move towards the $2,000 level in a few weeks. The uptrend in the yellow metal prices is on hold, with the greenback showing strength above the 100 mark.
The long weekend saw forex market volume drop for the Easter holidays. The British Pound to USD is moving lower with the US Dollar Index strengthening above the 100 mark and inflation remaining high in the US and the UK.