Slow Down in UK Economy Weighs Heavily on Pound

On Tuesday, the Pound behaved erratically, while it also slumped against many of its rivals after investors still had concerns about the economic recovery in the UK.

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Consumer credit dropped by a considerable amount in July, with the £0.042bn coming well under the expected rise of £0.441bn. This is proof that increasing infections is causing spending to decrease, all of which impacts the recovery of the economy. At the end of trading, according to the Foreign Exchange Market the currency finished at 1.1646 against the Euro and 1.3754 against the US Dollar.

It was a muted day for the Euro yesterday even though the recent CPI reading indicated that inflation had reached a 10-year high of 3%. However, any gains were limited as the ECB continues to take a dovish stance while the VAT cut in Germany last year would have helped to nudge inflation higher.

The US Dollar started on the back foot but managed to regain some losses later in the day, even after US consumer confidence struck a six month low. The sharp increase in US Treasury yields helped to give the currency a boost as the ten-year yield broke through the 1.30% marker.

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