The Pound endures its worst trading week since June

The Pound endured its worst trading week since June, dropping two cents against the Euro and nearly three cents against the Dollar to hit its lowest trading level against both since September in the last 24-trading hours.

Andrew Bailey, the current Governor of the Bank of England was compared to the Bank's previous Governor Mark Carney as another 'unreliable boyfriend' after the Bank voted 7-2 to keep UK interest rates unchanged after so many warnings from various Bank members including Bailey that the Bank needed to take action to control the recent spike in inflation..

In the end, at last Thursday's monthly policy meeting, the Bank of England defied expectations by keeping UK interest rates on hold, putting concerns about slowing growth above predictions for a spike in inflation. Worse still for the Pound, the Bank also pushed back against market bets on a series of interest rate increases to 1% next year noting that path would leave inflation below target at the end of their forecast period.

Whilst the Bank added that recent economic data reinforces the view that borrowing costs will have to rise in the “coming months” to keep inflation on target, this was too little too late to prevent the bottom falling out of the Pound from Thursday afternoon until the end of the trading week.

By contrast, the US Federal Reserve announced last Wednesday that they will start tapering their asset purchase programme later this month by $15 billion per month with a completion of the taper expected by mid-2022 so ending the week with both Dollar strength and Pound weakness.

As all eyes were on the Fed and Bank of England policy announcements last week, the latest UK business confidence data passed by the markets with next to no affect with business confidence in the UK at 43%, the second highest figure since the pandemic began. Encouragingly, 48% of firms said it is becoming easier to hire staff since the end of the furlough scheme at the end of September.?

The Nationwide reported last week that UK house prices have hit record highs with the average property rising in value by more than ￡30k since the pandemic struck with an annual growth rate of 9.9% in October, slightly lower than the 10% registered in September.

Meanwhile, COP26 rumbles on.?

Whilst caring for the environment can only be seen as a good thing, eyebrows have been raised after more than 400 private jets carrying world leaders and business executives to Cop26 arrived at Glasgow airport, blasting 13,000 tonnes of CO2 into the atmosphere with President Biden's entourage flying 85 cars from the United States to Italy for the G20 Summit then onto Scotland for COP26. Meanwhile, the EU Commission President Ursula von der Leyen used a private jet to travel just 31 miles.

Coinciding with the start of the summit, scientists working on the most authoritative study on climate change were reportedly urged to cover up the fact that the world’s temperature hasn’t risen for the last 15 years according to a leaked copy of a United Nations report.

The report is the result of six years’ work by UN’s Intergovernmental Panel on Climate Change (IPCC), which is seen as the world authority on the extent of climate change and what is causing it.

Whilst in my opinion it is easy but wrong to be cynical, all this does smack of 'Do as I say, not as I do' which is never going to go down well with voters.

So where does the Pound go from here?

After so much build up to Thursday only for expectations to be dashed, its hard to see the Pound bouncing back strongly anytime soon although there will inevitably be a build-up in speculation around the next bank of England meeting, due on 16 December.?

Pound buyers from other currencies, this could well be an unexpected window of opportunity for you.

This week's quote comes from the legendary ice hockey player Wayne Gretzky "You miss 100% of the shots you don't take".

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