Sterling is losing strength in the Forex market, now that risk appetite is diminishing among investors.
The British economy has been the most successful economy of the year, and its currency has been the same. As such, the political environment in the UK has not been conducive to the performance of the Pound.
Therefore, many analysts believe that the Pound’s performance will continue in this way. The economic outlook for the UK seems to be unwilling to improve in the coming future.
Pound loses ground and continues on rough roads
The Brexit affair has wreaked havoc beyond all expectations. Since the UK’s decision on independence, investors have looked at the British currency in the Forex market with uncertainty.
But now, the Brexit is not the only thing that has affected the British currency. The British country has been suffering since the economic blockades started because of the pandemic in Europe.
In addition to this, British analysts promised that the pound would improve its performance once the government lifted the blockades of the service sector in England.
„We still believe that the UK faces problems in the future and we believe that the economy will fare worse than others in Europe.
Rony Nehme, chief market analyst at financial research firm Squared Financial.
However, this has resulted in an inordinate increase in the number of cases of contagion in the UK. Thus, the pound’s possible good performance was dismissed.
Will the Pound have a future as an emerging currency?
A new fall of the British currency
The British Pound lost ground and fell on Thursday as risk aversion spread among Forex investors, slightly increasing the appeal of the U.S. Dollar.
However, the USD has not improved its performance, as in the past two weeks the U.S. currency has performed negatively compared to moments earlier in the pandemic period.
In addition, optimistic growth data from China failed to lift investment sentiment.
The increase in political tensions between China and the US, coupled with the weak performance of the Chinese economy to really achieve the economic upturn they promise, did not generate enough confidence.
In the case of the Pound, one of the relevant factors that caused this decline was the publication of the British companies‘ payroll figures. The number of employees fell by 649,000 from March to June.
But the biggest falls occurred at the beginning of the economic blockade by the coronavirus. Payrolls fell by more than 74,400 in June, compared to 450,000 in April and 124,000 in May.
In addition, British gross domestic product data for May increased less than expected.
Investors are wondering whether the already announced fiscal stimulus measures and the discussions of economic agreements with the EU will be enough to shore up the British economy.