Sterling Struggles Amid Rising Economic Uncertainty
The British pound weakened against the dollar due to safe-haven flows into the U.S. currency and concerns over the UK economy's rising energy costs. Despite improved business activity, companies report a surge in costs and increasing pessimism in the manufacturing sector, fueled by international tensions and domestic economic challenges.
The British pound slipped against the dollar on Thursday as investors flocked to the U.S. currency perceived as a safe haven amid nervousness about the Middle East ceasefire's fragility. Simultaneously, rising energy costs signaled looming economic troubles for the UK.
A recent survey revealed UK companies faced unprecedented cost increases in April, with manufacturing confidence plummeting. Traders now perceive a 75% likelihood of the Bank of England hiking rates by June, up from earlier predictions of a 50/50 chance. Sterling concluded the day at $1.349, a 0.17% weekly dip.
As tensions in Iran ripple through the economy, a record number of British companies reported rising costs, indicating potential inflation surges. While business activities surpassed expectations, a survey by the Confederation of British Industry showed manufacturers' deepest pessimism since COVID-19's onset.
(With inputs from agencies.)
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