The GBP/USD pair has fallen below 1.2250. Commerzbank economists point out that the dire general situation in which the UK is currently in justifies the weakness of the pound sterling.
Why the situation in Great Britain is negative for the GBP
“While the most urgent real economic factors putting pressure on the economy seem transitory on the Continent (the threat of a gas crisis and consequent high energy prices), Britain’s urgent problems seem more permanent. Therefore, it is not implausible to assume a long-term growth disadvantage for the UK economy compared to Europe.”
“Since long-term growth is relevant to real exchange rates, its outlook influences current exchange rates. And so this accumulation of bad news from the island is justification enough for sterling to be weak.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
