The Pound experienced a volatile day of trading on Thursday as the currency reacted to both positive and negative news.
It was announced the impact of covid on the economy was not as bad as initially feared which should have given the currency a boost. However, this was not the case as it was announced that Brexit would cause twice as much damage as the pandemic, placing downward pressure on the Pound. At the end of the day, the currency finished at 1.1811 against the Euro and 1.3799 against the US Dollar according to the Foreign Exchange Market.
The Euro pushed higher yesterday after traders expected a hike in rates earlier than anticipated after the European Central Bank’s policy meeting. The President took a dovish stance and muted their expectations although there was an admission that inflation was causing more problems than anticipated. This resulted in markets bringing forward their rate-rise predictions.
The US Dollar fell yesterday as there was a drop in US GDP growth for the third quarter of this year, dropping to 2% from the 6.7% seen in the second quarter. This sharp slowdown hints at the fact that the UK economy has been damaged more than anticipated by the Delta variant of coronavirus.