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25 Eastcheap 2nd Floor
London EC3M 1DE
United Kingdom

+44 (0) 20 3880 0575

help@privalgo.co.uk

Office Hours
Monday - Friday
8:00am - 5:30pm

Last week, we spoke about how the pound was nosediving. This was largely down to an unbridled rise in Covid-19 cases, the UK government’s recent U-turns, and growingly pessimistic global sentiment.

What a difference a week can make. Since then, we’ve seen GBP make a considerable recovery against both USD and EUR. In the last week, GBP/USD has rebounded circa 2%, while GBP/EUR has come back 1.7%. The markets are putting this down to continued dovish messages from the European Central Bank and a surprisingly improved outlook regarding Covid figures in the UK.

This week, Privalgo’s Currency Experts discuss the decrease of coronavirus cases in the UK, the upcoming Federal Reserve’s announcement and resurfacing Brexit troubles.

If you think your budget could be affected by any of the issues discussed in this article, book a meeting with a Currency Specialist today. We can talk through your requirements, provide you with a rate, and discuss some potential solutions.

Book a chat with a Currency Specialist

Patrick Oakley
Business Development Manager

We all knew ‘Freedom Day’ was a risk, but it may well have paid off. Day by day, we’re seeing the Covid infection rate fall. In the last seven days, it’s dropped over 20%

And GBP/USD has started to feel the benefit.

After nosediving throughout the last few weeks, the currency pair is starting to see a recovery, albeit a wobbly one. Yesterday, GBP appreciated half a per cent against USD.

Although this is positive news, we’ll need to see a continued downward trend in covid cases over the coming weeks to know the real impact of “Freedom Day.” Yet, GBP’s recently improved performance may be a sign of the market’s forward-thinking optimism.

But we’re not out of the woods yet. The ‘pingdemic’ continues to play havoc, causing staff shortages and supply chain issues, despite the government’s efforts to encourage double-vaccinated staff to continue working. A problem that could delay the UK’s post-pandemic recovery.

The risks are still there if you or your business are selling GDP. Get in touch with me today and we discuss potential solutions that could enable you to hedge against them.

John Hallahan
Business Development Manager

The markets will be looking across the Atlantic this week, towards the two-day long FOMC meeting. A statement from Jerome Powell will be made on Wednesday.

USD bulls will be after some forward guidance from the Fed on its tapering programme. However, this could be marred by a resurgence in the global pandemic.

While the UK is enjoying some recent positive news regarding falling Covid cases, the US is experiencing the opposite. A quadrupling of daily cases is being spearheaded by the Delta variant.

At the same time, fewer US citizens are vaccinated than those in the UK. While just 56% of Americans have one shot, the number is up to 70% in the UK.

This could go one of two ways for USD. For one, it could impede the US’s continued economic recovery, and delay the Fed’s tapering progress. This could mean USD downside.

Alternatively, if the Covid situation in the US gets out of hand, then it could panic the markets. Recent history has shown us that a bump in Covid cases encourages people to head towards USD — a currency traditionally seen as a safe haven. This could give it a boost.

Marcus Beaumont
Business Development Manager

It’s a relatively quiet week regarding UK data releases. Anything that moves the GBP/USD currency pair will largely come from across the pond.

Yet one thing that could be affecting GDP this side is our old friend Brexit tension. The EU has proposed ironing out and simplifying the Northern Ireland Protocol. Johnson said that the proposal didn’t go far enough.

Both parties want change. Just not the same level of change.

The resurfacing of Brexit woes could be the reason GBP has slowed down in its recovery against USD. Despite positive news surrounding Covid cases in the UK falling, the currency pair has depreciated around 0.20% this morning.

I’d be keen to hear your opinions on this. Will these tensions last? And if so, will the news continue to weigh heavy on GBP?

Jack Nielsen
Business Development Manager

News hit the other day of Rishi Sunak’s plans for a potential regulated, centralised cryptocurrency: Britcoin. The Chancellor has a created a taskforce within the Bank of England to investigate how it may work.

Opinions are split as to whether the idea is feasible. Some experts are optimistic that a centralised digital currency will help cut banking fees for small businesses and reduce transaction times.

Others are worried that it will cause further instability in the UK economy. Plus, if Britcoin eats too much into the money available for high-street banks, it could lead to higher borrowing costs for normal people.

Interestingly, this comes at the same time as a concerning announcement from a leading insolvency firm, Begbies Taylor. 

Insolvency experts warn that businesses that accept unregulated, hard-to-trace cryptocurrencies could easily hide funds from the authorities if they go bust. Money that should be regathered from HM Revenue and Customs in these events could end up in Directors’ pockets as they walk away.

As more and more companies start to accept unregulated crypto, we could see the government begin to lose out.

Does this call for a change? Should the UK government be looking for a way to control this situation? Is Britcoin the answer? Who knows?

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