British pound strengthens its exchange value
During the European trading morning of Wednesday, 23 November 2022, the domestic currency of the United Kingdom of Great Britain and Northern Ireland, the British pound (GBP – £), slightly strengthened its exchange value against other world currencies and especially against the American dollar (USD – US$). According to analysts, it is largely due to the monetary policy of the central bank of the United Kingdom (UK), the Bank of England (BoE), which raised interest rates to 3%. Great Britain is also experiencing record inflation of 11.1%.
On 22 November, at 7:18 am CET, the currency pair of the GBP and the USD traded on the international foreign exchange – Forex market at US$ 1.1886 per GBP with the GBP exchange rate up +0.03% against the USD. At the same time, according to the US Dollar Currency Index (DXY), we saw the USD at a price level of 107.04 with a daily decrease of -0.17%. However, the GBP fell -0.21% trading at £ 0.868 per EUR. Thus, the global currency pair EUR/USD traded at a mutual exchange rate at US$ 1.032 per EUR, with the daily strengthening of the EUR by +0.22% against the USD.
According to analysts, along with the significantly tightened monetary policy of the BoE, another positive moment for investor confidence in GBP and its further growth is a new revised state budget, which was discussed last Thursday on 17 November by the Government of the United Kingdom, with the new Prime Minister Mr. Rishi Sunak. Last Thursday, the British government presented an extensive fiscal plan, the aim of which is to close the so-called “gaping hole” in public finances and to restore the economic credibility of the United Kingdom of Great Britain and Northern Ireland both among domestic businessmen and especially in relationship with foreign investors. It is precisely this problem of the so-called “outflow” of foreign investors that the economy of Great Britain is struggling with for the second year after leaving the EU.
In his eagerly-awaited inaugural statement last week, Chancellor of the Exchequer Jeremy Hunt outlined significant spending cuts and tax rises totaling £ 55 billion. These measures will add to the financial hardships of millions of Britons who will face the country’s worst cost of living crisis in a decade, at what is likely to be the longest economic recession in the UK’s history. However, Mr. Hunt said it was necessary to curb 41-year high inflation and restore the UK’s reputation; calling this plan the “ultimate growth strategy”. Hunt also added, “we must continue a relentless fight to bring (inflation) down, including a rock-solid commitment to rebuild our public finances.” Other measures announced included a 10% rise in state pension, benefits and tax relief – in line with September inflation – and an increase in the national living wage to £ 10.42 an hour for those aged 23 and over. On the other hand, there was also an increase in tax revenue, with energy companies facing expanded windfall tax of 35% up from 25%.