The pound sterling fell against major currencies during trading today, Wednesday, after data issued by the Office for National Statistics in the United Kingdom revealed that the volume of public sector borrowing in the United Kingdom tripled during last November, recording 22 billion pounds, compared to the volume of borrowing. It reached 8.1 billion pounds in November last year.
Monetary tightening and recession fears
The British pound has been under pressure since the start of the week’s trading, despite the Bank of England’s decision last week to raise interest rates by 50 basis points, which pushed the Bank of England interest rate to 3.50%, its highest rate in 14 years, which was issued at the end of last week, by a majority of 6 Votes in favor of raising the interest rate by 50 basis points, compared to two votes in favor of raising the equations by about 75 basis points. Bank of England President Andrew Bailey also released comments following the interest rate decision in which he left the door open for further rate hikes. The Bank of England followed the Federal Reserve and the European Central Bank in raising rates, but the impact of the decision was not as positive on the pound as the dollar and the European euro. The decision to raise the interest rate was in line with expectations, as it was fully priced in, adding pressure on the GBP. Especially after the Bank of England’s expectations regarding economic growth, which included a decline in the gross domestic product in the United Kingdom by 0.1% during the last quarter of this year, after it recorded a decrease of 0.5% during the third quarter. The Bank of England is caught between fears of significantly increasing the pace of tightening to control inflation and the economy entering a deeper recession.
The British currency fell against major currencies
In terms of trading, the British currency declined against most of the major currencies during the day, as the euro rose against the pound sterling by 0.61%, to trade the euro pound at 0.87723, which is the highest level of the pair since last November 15. The British pound fell against the Japanese yen by 0.43%, to trade the pound yen at 159.7075. The British pound fell against the Canadian dollar, by 0.45%, to record 1.65021 levels. This is at exactly 13:01 pm GMT.
At the same time, the British pound fell against the US dollar by 0.54%, to trade the pound-dollar pair at 1.21087 levels. The Pound also fell against the Swiss Franc, by 0.67%, to hit 1.12102. The British pound fell against the Australian dollar, by 0.79%, to reach 1.81077. Finally, the New Zealand dollar was the only currency that recorded a decline against the British pound by 0.12%, as the pair traded at 1.92296 levels.