Pounds Sterling gained against the United States Dollar and other currencies on Thursday after Prime Minister Liz Truss announced her resignation.
The British Pound had plunged to a 37-year low within a month of her emergence as prime minister in September 2022 when Kwasi Kwarteng, the former finance minister appointed by Truss, announced a 45% unfunded tax cut.
Pounds Sterling plunged to 1.0332 against the United States Dollar on September 26, 2022 before paring losses a few days after the administration abandoned the policy following a nationwide outcry.
Two weeks later, Truss sacked Kwasi Kwarteng and appointed Jeremy Hunt from the opposition, Labour Party, to halt growing criticism from disappointed Britons grappling with a high cost of living amid low wage growth.
Earlier this week, the Consumer Price Index data showed that the inflation rate returned back to 10.1% in September, the highest in four decades and the same as July.
The parliament and the entire United Kingdom demanded answers to halt the nation’s extensive decline. With insults and poor diplomacy, Truss puts herself in an uncomfortable situation at a period when everyone was calling for a workable policy.
On Thursday, She announced her resignation. Immediately, the British Pound rebounded against the United States Dollar to 1.1296. An indication of investors welcoming her resignation.
Against the Japanese Yen, it rose to 169.74 at the time of writing. Similarly, it gained against the Swiss Franc, trading at 1.1307.
Goldman Sachs Upgrades Pound Forecast: Sterling Expected to Reach $1.30 in Six Months
Financial titan Goldman Sachs has revised its forecast for the British Pound, anticipating a notable uptick.
The sterling, which has already showcased resilience throughout the year, is now expected to reach $1.30 within the next six months from its previous projection of $1.20.
Data from the Commodity Futures Trading Commission reveals a shift in investor sentiment with a net bullish position on the pound recorded for the first time since September during the week ending December 5.
This suggests a growing confidence among investors regarding the currency’s future trajectory.
Despite the global economic landscape facing uncertainties and challenges, the pound has maintained its standing, holding steady around $1.2545 in Asian trading on Monday.
Year to date, the sterling has demonstrated remarkable strength, securing its position as the second-best-performing currency in the Group-of-10, surpassed only by the Swiss franc.
Goldman Sachs’ updated forecast aligns with the market’s inclination towards a more optimistic view of the pound.
Analysts at the financial giant attribute this shift to the expectation of a ‘soft landing’ strategy by the Bank of England, coupled with a more restrained approach to interest rate cuts compared to other major economies.
Swaps markets also echo Goldman’s outlook, with investors pricing in approximately 85 basis points of easing by the Bank of England, a notably lower estimate compared to anticipated cuts by the Federal Reserve and the European Central Bank.
This positions the Bank of England as a less dovish outlier in the global economic landscape.
While the pound’s current trading environment indicates positivity, analysts caution that uncertainties persist.
Nevertheless, Fidelity International remains optimistic, predicting the pound to strengthen further, possibly reaching the $1.40 level in the coming year.
The revised forecast by Goldman Sachs not only underscores the evolving dynamics in currency markets but also reflects a broader market sentiment that sees the British Pound as a robust player in the face of economic challenges.
As the global financial landscape continues to navigate uncertainties, the pound’s potential ascent to $1.30 stands as a testament to its enduring strength and investor confidence.
Naira Plummets as UK Pound Surges to Over N1000 to £1 on Black Market
The exchange rate has reached over N1000 to £1, leaving many Nigerians worried about the future of their currency.
Pound to Naira Exchange Rate Hits Record Low of N1005 at Black Market
The Naira continues its decline against global counterparts as the local currency exchanged at N1005 to a British Pound Sterling on Sunday at the black market.
Against the United States Dollar, the Nigerian Naira traded at about N815 while a unit of Euro common currency was exchanged at N870 to a Naira.
At the interbank forex section, the Nigerian Naira slid to N440.26 against the United States Dollar and dipped marginally against the Euro common currency to N431.2787. Naira, however, appreciated against the Pound to N493.2673.
International Monetary Fund (IMF) and other multilateral financial institutions have said the huge difference between the black market and the Central Bank of Nigeria (CBN) managed interbank section is the bane of Nigeria’s currency racketeering.
In October 2021, Vice President Osibanjo explained why the forex differential is the reason why Nigeria continues to struggle with low capital importation and investment.
According to him, “As for the exchange rate, I think we need to move our rates to [be] as reflective of the market as possible. This, in my own respective view, is the only way to improve supply,” the vice president said.
“We can’t get new dollars into the system, where the exchange rate is artificially low. And everyone knows by how much our reserves can grow. I’m convinced that the demand management strategy currently being adopted by the CBN needs a rethink, and that is just my view.
“Anyway, all those are issues that when the CBN governor has time to address, he will be able to address in full.”
Crude oil opened lower on Monday following reports that China is planning to up COVID-19 restrictions in an effort to curb the rising number of victims.
Brent crude oil, the international benchmark for Nigerian type of oil, has since pared losses to $98.66 a barrel at 11:20 am, up from $97 it opened when the news of Chinese Covid-19 was made public.
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