Sterling Suffered Its Worst Month Since Brexit, And Analysts Expect It To Plunge To New Depths

• The Sterling has suffered its sharpest monthly fall against the U.S. dollar since the aftermath of the Brexit referendum, as political uncertainty and a historic cost-of-living crisis weigh heavily on the British currency. The Sterling dropped 4.5% against the greenback last month and continued to slide on Thursday, September 1, 2022, last trading just below $1.16 by mid-morning in London. The pound also fell nearly 3% against the euro last month.
• The U.K. faces a rapidly deteriorating cost-of-living crisis as food and energy prices soar, with millions of households facing poverty this winter. The energy crisis arising from Russia’s war in Ukraine is now widely expected to push the eurozone and U.K. economies into recession, while some economists expect the U.S. to avoid the same fate given its relatively stronger economic position and energy independence.
• In a research note Wednesday, August 31, 2022, Capital Economics Chief U.K. Economist Paul Dales said this divergence would drive further weakness in both the euro and the pound against the U.S. dollar and expects sterling to “plunge to new depths” as political and economic uncertainty continue to hammer U.K. assets.

(Source: CNBC)