Looking back on 2022, GBP exchange rates had one of the most volatile years on record especially against the US Dollar.
After such a bumpy ride for the Pound you may expect to see less volatility for GBP exchange rates but with economic growth set to drop this can never be ruled out, especially at the beginning of the year.
To recap 2022, GBP/USD experienced its worst annual performance since 2016 which was an exceptional year owing to the unexpected Brexit vote which caught the currency markets off guard. GBP/USD also hit its lowest level in history last year when the pair almost traded as low as parity when cable (GBP/USD) dropped to 1.0350 in early September.
There were major falls for GBP exchange rates around this time due to the disastrous Mini-Budget. At the time Liz Truss was Prime Minister and Kwasi Kwarteng were the Prime Minister and Chancellor of the Exchequer with both having been replaced since. These changes (Rishi Sunak is now PM and Jeremy Hunt is the Chancellor of the Exchequer) have been welcomed by financial markets but the UK’s problems are far from over.
Sentiment towards the UK coming into 2022 had been positive as the Bank of England was the first major central bank to hike interest rates has inflation was steadily rising towards the end of 2021.
Inflation is now a very hot topic as the current rate exceeds 10% which is over five times that of the Bank of England’s target rate of 2%. This is forcing the BoE to hike interest rates to counter the increasing inflation levels, but this comes at a time of a cost-of-living crises and a prolonged recession being forecasted so 2023 could be another busy year for the Pound.
I predict that how the UK economy performs with year along with global sentiment is likely to influence the Pounds value moving forward. Improvements in global sentiment often boosts the Pounds value, and vice-versa.
Should you wish to discuss and plan a currency exchange involving the Pound, or any other major currency for that matter, please feel free to get in touch with me for insights and competitive exchange rates. We can also set up rate alerts for you too. You can contact me directly (Joe) at [email protected]