- The British pound collapses below 1.3500 despite market optimism.
- Rising natural gas prices and a UK petrol and truck driver shortage weigh on the GBP / USD pair.
- Bank of England Governor Bailey: Expect the UK economy to recover to pre-pandemic levels early next year.
The GBP/USD It falls below 1.3500, down 0.84%, and is trading at 1.3422 at the time of writing. The pound has been unable to recover since Tuesday’s collapse of nearly 200 pips, extending losses to nearly 2% in just two days.
Market sentiment is bullish amid strong demand for US dollars across the board. Concerns about rising natural gas prices and a petrol shortage in the UK outpaced the recovery. On Tuesday, the British pound fell in line with risk-absent market sentiment, falling 1.18% as investors expect interest rate hikes from the central bank in the future.
Additionally, the post-Brexit truck driver shortage is weighing on oil companies, which warned they didn’t have enough truck drivers to deliver gasoline and diesel from refineries to service stations. Also, panic fuel buying for nearly a week is leaving the pumps dry across the country.
Bailey of the Bank of England expects the UK economy to recover to pre-pandemic levels early next year
On Wednesday, at an ECB Central Banking Panel, Bank of England Governor Andrew Bailey said he expected the UK economy to rebound to pre-pandemic production level early next year than anticipated in August.
Meanwhile, during the European session, Bank of England consumer credit for August rose to £ 0.351 billion better than the £ 0.3 billion forecast by analysts, although the GBP / USD pair did not react to the announcement.
On the other hand, the National Association of Realtors published the Pending Home Sales for August. The figure came out better than expected, increasing 8.1%, more than the 1.4% forecast on a monthly basis. However, compared to the year-on-year figure, sales contracted 8.3%, compared to an improvement of 14.5% in the same period.
Meanwhile, in the US, initial jobless claims are expected to drop to 335,000. Furthermore, the Gross Domestic Product for the second quarter on an annual basis is forecast at 6.6%, in line with the previous period. In addition, a basic personal consumption expenditure (second quarter) is forecast at 6.1%.
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